When a taxpayer exchanges (under Section 1031) their relinquished property after October 18th, they will have less than 180 days in which to close on the purchase of their replacement property - UNLESS the taxpayer obtains an extension for filing their income tax return.
This is very important, because the deadline for completing the taxpayer's exchange is the earlier of 180 days from the closing of the relinquished property, or the due date of filing the tax return, including any extensions therein. The necessary information on a Section 1031 tax deferred exchange is filled out on IRS Form 8824 and must be completed for the tax year of the transfer of the relinquished property. FYI--Every file we open for a client, where we are acting as the Qualified Intermediary and the sale of the relinquished property occurs on or after October 18, receives a cautionary reminder of this important rule. This often misunderstood requirement is construed and enforced very strictly by IRS
AccountingWEB would like to thank Stephen A. Wayner, vice president of Bayview Financial Exchange Services, for pointing out this important information.