THE 180 DAY RULE
Section 1031 requires that you purchase one or more of the new properties by the 180th day after closing of the old property, or the date that your tax return falls due for the year of the Relinquished Property together with any extensions, whichever shall occur first. You must purchase one or more properties listed on your 45 day identification list.
Example 1:
Brad Jones identified only one property, a condominium under construction, within 45 days of his sale, but now the builder tells him it won’t be completed and ready to close within the 180 day period. If Brad cannot close within 180 days his exchange will fail.
Example 2:
Katie Tierney closes her Relinquished Property on December 31, 2005. Her 2004 federal income tax return is due on April 15, which is 105 days after her Relinquished Property closed. Katie cannot close her Replacement Property until May 30. For Katie to close her Replacement Property, she must file an extension of the time to file her federal income tax return, in which case she has until August 15 to file her return. She therefore has her full 180 days to close her Replacement Property, and can close it on May 30.
