Don’t File Your Tax Returns If…

Remember that the actual deadline for completing an exchange is the earlier of either 180 days from the date you transfer the relinquished property or the date, including extensions, that your tax return is due for the year in which you transfer the relinquished property.

Exchangers must report their exchanges on the tax return for the year in which the exchange begins. Thus, if you relinquish property after October 18 you actually have less than 180 days to complete the exchange, unless you file for an extension.

If you began a 1031 exchange by relinquishing property in 2007 and your 180 deadline is in 2008, you should not file your income tax return prior to your closing on replacement property.

And if your 180-day deadline is beyond April 15, 2008, then you will need to file for an extension, since you should not file a 2007 Income Tax Return until you have closed on the replacement property.

Again:

If you began a 1031 exchange by relinquishing property in 2007 and your 180-day deadline is in 2008, you should:

(a) file for and receive an extension from the IRS for your tax return due date,

(b) acquire the replacement property, and then

(c) file your tax return.

To contact Melissa J. Fox about serving as a qualified intermediary or for other 1031 exchange services, send an email to strategicfox@gmail.com

 

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