Let’s cover the basics of a 1031 exchange, starting with what it is: IRS Code Section 1031, referred to as a 1031 Exchange, is a sale and reinvestment of like-kind property so as to defer payment on any capital gains or losses.
Here are the major bullet points to know:
- Must be exchanged for LIKE KIND property.
- You have 45 days from the closing of your sale to identify which property you’ll be buying.
- You have 180 days from the closing of your sale to actually close on your purchase.
- If you’re selling multiple properties, the 45/180 days start from the sale of your first property.
- These deadlines can not be extended for any reason.
- Proceeds to be used from the sale on the next purchase must be held by a Qualified Intermediary.
For more details on a 1031 Exchange, visit the Federation of Exchange Accommodations FAQs.
For more particular information on your situation, contact your CPA
Real estate can be exchanged for any real estate, while personal property must be exchanged for like kind or like class personal property. Thirteen General Asset Classes and the North American Industry Classification System is used to identify like kind tangible personal property.
The IRS recently posted a 120 day extension for those taxpayers and providers of time-sensitive acts in counties affected by Hurricane Irene at http://1.usa.gov/pnnnKn.