Question:
“When you do a 1031 exchange, what are the time frames and when do they start?”
Answer:
Great question. This is something I’ve found that few agents even know.
There are two time frames, running concurrently, starting the day you close on the property you’re selling:
- 45 days to “identify” the property(s) you’re buying. Identifying means notifying the appropriate party (typically the “accomodator,” aka the party that holds your funds).
- 180 days to close your purchase. Exception: you can’t file your taxes for the year you sold the property until you close your purchase. So if you closed your sale 12/15/12 and haven’t closed your purchase by tax time 4/15/13, you must file an income tax extension.
Some people are nervous about the 45 days and don’t feel it’s enough time. The solution is to start looking and probably making an offer while your sale property is in escrow.
BTW, this answer assumes you’re doing the typical “delayed exchange” and not a “reverse exchange,” where you close on your purchase before you close on your sale.
As always, please verify this (and anything I say that sounds like tax advice) with your tax professional.
