In a 1031 Exchange? You May Need to File a Tax Extension

Posted Nov 30, 2017

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Are you currently in a 1031 exchange or contemplating beginning an exchange before the end of the year? If you sold or are planning to sell investment property between October 17, 2017 and December 31, 2017, you should plan on filing IRS Form 4868 - Application for Automatic Extension of Time to File U.S. Individual Income Tax Return on or before April 15, 2018.

A common misconception is that investors using a 1031 exchange to defer capital gains tax liabilities have 180 days to complete their exchange. Actually, IRC Section 1031 requires that taxpayers acquire all replacement property(ies) by the earlier of 180 days from the sale of the relinquished property or the Federal tax return due date for the year in which the exchange commenced. So if you sold your investment property anytime after October 17, the deadline to complete your exchange will be April 15, 2018 unless you file for an extension.

Once the exchange is complete, you can file your return and report the exchange on IRS Form 8824 - Like-Kind Exchanges. Once you have filed a return, it typically cannot be amended to report an exchange. Filing a return while in the middle of a 1031 exchange only serves to shorten the allowed 180 day completion timeframe.

Questions about your ongoing or planned 1031 exchange? Realized 1031 can provide you with the finer points of information concerning 1031 Exchanges and other investment issues. Learn more by logging on to or by calling 877-797-1031.

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