Important Information for Investors Beginning a 1031 Exchange
From October 17 – December 31, 2016
Do Not File Your 2016 Income Tax Return Until Your Exchange Has Been Fully Completed
The time frame a taxpayer 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 a taxpayer may be entitled to a filing extension to extend the 180-day period, the taxpayer must obtain their filing extension. Consequently, some taxpayers closing on the sale of relinquished property late in 2016 may need to file for an extension to utilize the entire 180-day exchange period. As a general rule, taxpayers should not file a tax return until the 1031 exchange is complete.
More specifically, if the 180th day following the closing of the sale of the first relinquished property falls after the due date for filing the 2016 tax return (generally April 15, 2017, for individuals), a taxpayer must file IRS Form 4868, Application for Automatic Extension of Time To File U.S. Individual Income Tax Return with the IRS to extend the filing date. If a taxpayer 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.
If you have any questions, please call your Exchange Counselor at Asset Preservation at the National Headquarters 800-282-1031 or Eastern Regional Office 866-394-1031.
Tax Relief to Victims of Hurricane Matthew
The IRS has provided tax relief to victims of Hurricane Matthew. Storm victims in much of North Carolina and parts of South Carolina, Georgia and Florida have until March 15, 2017, to file certain individual and business tax returns and make certain tax payments. This includes an additional filing extension for those with valid extensions that ran out at midnight on October 17, 2016.
If the taxpayer is considered an “affected taxpayer,” then additional guidance concerning their 1031 exchange is provided in Rev. Proc. 2007-56. If the taxpayer meets certain criteria, then any 45-day or 180-day deadline that falls on or after the disaster date is extended to 120 days from such deadline. Every taxpayer should be directed to their tax advisor to determine whether they are eligible for the relief and to obtain additional information with respect to their particular circumstances.
For more information on all disaster areas, Visit the IRS: Tax Relief in Disaster Situations.
Asset Preservation would appreciate the opportunity to work with you on your next exchange regardless of how simple or complex. Give us a call at 800-282-1031 to open a 1031 exchange. To open a 1031 exchange online, email us at firstname.lastname@example.org.
API is committed to providing its exchange customers with unmatched service, and the highest level of security available in the 1031 exchange industry. From the customer’s first contact with an API representative, API’s professional exchange counselors, attorneys and accountants work together to meet the customer’s service needs in order to ensure a smooth transaction with no surprises. In the background, API’s management maintains tight financial controls and multi-layered security systems necessary to provide a level of comfort and performance quality relied on by sophisticated investors and corporate America; we call it the “The API Advantage™.”
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