Tax Straddling | Are you giving up valuable days of your 1031 Exchange?
Tanya Soule: Hi, It’s Tanya Soule with Chase International Real Estate. I’m here today with Kandas Myer of ipx1031 Exchange and I have just heard about something I think some exchangers might be interested in... tax straddling with your exchange. Kandas, can you tell us a little bit about that?
Kandas Myer: Oh, yes, of course. At this time of year, the tax straddling issue becomes..it kind of bubbles up to the surface. What it is is in 1031 tax code, they give you of course a 180 day window to get your exchange done from the day that you close escrow on the property that you're selling, you have that 180 day window to replace the property and that is to close escrow on the replacement property. You only have 45 days to identify it, but you have a full 180 days, unless you file your taxes before the 180 days is done. Because the way the code is written it is basically that you have that 180 days or until your next tax filing occurs. So, as a result of that, you know once we have mid-October and beyond until the end of the year, that 180 days can be truncated by the filing of an exchanger’s income tax. And it's really important that they know that if they need the full 180 days, that they don't file their taxes before they close escrow on the replacement property, if they've already closed escrow on the one they're selling, and that of course occurs anytime between about October 15th and the end of the year. So, it’s called the tax straddling issue, kind of not well known, but I'm really glad that we're talking about it because it affects a lot of folks this time of year.
Tanya Soule: We don't want them to lose out on the days that they actually have. So, say for instance, if they sell their property in October, they start that 180 days...or say they sell it in December, right now, and they start that 180 day countdown, if they file April 15th, they’re actually giving up days that they could use if they don't file an extension.
Kandas Myer: That’s right. And she’s just mentioned what the remedy is. If you need all of the 180 days and you're not going to be done closing escrow all the replacement property before April 15th, and a taxpayer should be filing for an extension if they're still in the middle of their exchange. Now if they've already closed escrow on the replacement property before they file their taxes, they're fine. But the straddling thing occurs when they've closed December 31st or earlier, anytime between actually October 15th and December 31st. If they haven't closed escrow on the one that they're going to be replacing by April 15th, which is when not most people are filing their taxes, then they would need to be filing an extension.
Tanya Soule: OK. Great. Thank you so much and thank you for coming in and talking about timely topics again.
Kandas Myer: My pleasure.
Tanya Soule: If you have a question about real estate or 1031 exchanges, feel free to give me a call or Kandas. Her information and my information will be at the bottom of YouTube video and we look forward to seeing you here in Incline Village. Thanks so much.
Kandas Myer: Bye.
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Contributors:
Tanya Soule, Realtor®, CLHMS®, SRS®, RSPS®, SRES®, MRP®, SFR® | Incline Village Real Estate. Elevated.
Chase International
917 Tahoe Blvd., Ste. 100
Incline Village, NV 89451
(775) 690-2341
tanya@LivingTahoe.com
www.LivingTahoe.com
NV S.0170786 PM.0165008
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Kandas Myer ▪ Vice President - Nevada
Investment Property Exchange Services, Inc. (IPX1031)
5441 Kietzke Ln Suite 100 • Reno, NV 89511
m: 775.721.4190
e: kandas.myer@ipx1031.com w: www.ipx1031.com
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