IRS Extension
If you closed on your 1031 exchange relinquished property in the last quarter of 2023 and still have an active 1031 exchange you may want to file an on-time tax return extension.
The IRS 1031 regulations say: “The exchange period begins on the date the taxpayer transfers the relinquished property and ends at midnight on the earlier of the 180th day thereafter or the due date (including extensions) for the taxpayer’s return”.
If you closed on a relinquished property after October 2023, and will not receive your replacement property until after the normal 2023 income tax filing due date (Monday April 15, 2024, for individuals this year), you must file an on-time extension for the filing of your 2021 federal tax return to get the full 180 days to complete the exchange.
Taxpayers use IRS Form 4868 to file for an automatic six-month extension. If you closed on your relinquished property anytime in 2023, you must report the completed exchange on IRS Form 8824, Like-Kind Exchange, as part of your 2023 federal tax return. You may not file your tax return for 2023 until the exchange is completed.