Every year, there comes a time when the days get shorter…a chill hangs in the air…pumpkins start appearing on doorsteps…
…and you know that the witching hour has begun.
What makes this time of year such a spoooooky one for 1031 exchanges? Well, October 16th marks the last day of each calendar year that you can close a property sale and then take the full 180-day window to close on 1031 replacement property — without extending your tax due date. If you close the sale of relinquished property on or after October 17th, you must either close on the replacement property before your tax return due date (April 15th for individuals), or file an extension on your tax return.
As a result, in the world of 1031 exchanges, the interval from October 17th to December 31st is known as the “witching period” — and every year, some Exchangers are surprised when, after filing their taxes, they’re no longer eligible to complete their 1031 exchange. Now that’s scary!
Of course, an extension of time to file your taxes can give you a full and complete 180 calendar days to complete the tax-deferred 1031 exchange transaction. You would then file your federal income tax return after the 1031 exchange has been completed, but within the extended filing period.
So be careful, keep this rule in mind when conducting any property sale late in the year…and happy Halloween!
What can we help you exchange?
At JTC Americas, Formerly, NES Financial, we’ve put together an industry-leading track record of 1031 success, across tens of thousands of transactions and more than 25 years in the business. And we’ve built a cutting-edge administration platform, called eSTAC®, from the ground up to maximize your transaction security and transparency.
Find out more about our 1031 Exchange Solution by filling out the form and downloading the Solution Sheet today!