From our friends at API Exchange – a good reminder for investors who may be doing 1031 exchanges at this time:
Important information for investors beginning a 1031 exchange
from October 18 ”“ December 31, 2012
The time frame an exchanger has to complete the acquisition of a replacement property in a 1031 exchange ends at midnight on the earlier of the 180th day after the date the relinquished property was transferred – or – the due date (including extensions) for the income tax return for the taxable year in which the transfer of the relinquished property occurs. (U.S. Treasury Regulations section 1.1031(k)-1(b)(2)). Even though an exchanger may be entitled to the granting of a tax extension, they must actually file IRS Form 4868 with the IRS to obtain the tax extension. Consequently, some exchangers closing late in 2012 may need to file to obtain this extension t! o have the benefit of the entire 180 day exchange period. As a general rule, exchangers should not file a 2012 Federal income tax return until the 1031 exchange is complete.
More specifically, if the 180th day following the closing of the first relinquished property falls after the due date for filing the 2012 tax return (generally April 15, 2013 for individuals), an exchanger must file IRS Form 4868 with the IRS to actually extend the filing date. If an exchanger does not file for such an extension, they will not be able to acquire any replacement property in an exchange after the tax return due date.
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