We saw a spike in activity during the last quarter of 2013, and have been working hard to ensure our clients and their advisors understand how critical it is to watch not only transaction deadlines, but filing deadlines as well.
Woodland Hills, CA (PRWEB) January 07, 2014
“Investors and advisors should be aware of the tax ramifications of 1031 exchange transactions closing in the latter part of 2013 not being eligible for the full benefits of capital gains deferral unless investors submit an extension on their April 15, 2014 filing deadline,” notes Kevin M. Levine, Executive Vice President of Peak 1031 Exchange Inc., (http://www.peakexchange.com). The end of 2013 has seen a spike in commercial real estate activity, with many of the seasoned players relying on the 1031 exchange process to mitigate tax liabilities. As the exchange process is gaining in popularity with a number of independent investors entering the market as well as veteran investors, Peak 1031 Exchange has noted an understandable lack of information on the implications of tax filing deadlines.
IRC §1031 statutes are extremely clear that investors have 45 days after the date that the relinquished property is transferred to officially identify the replacement investment. The exchange must be completed by the date 180 days following the transfer of the relinquished property, or the date of the investor’s federal tax return for the year in which the transfer occurred, whichever happens first. Levine is quick to point out that “the code doesn’t clarify how to address capital gains deferrals when the full cycle of the transaction runs into the following calendar year.”
Qualifying for tax deferrals under IRS 1031 Exchange regulations allow a maximum 180 days between sale of the initial investment property and acquisition of a replacement property. Investors could miss the fact that the allowable six month period for the transaction could extend past the April 15th filing date. “For investors hoping to defer taxes for the 2013 tax year, filing the extension would prove a wise move.”
For example, for investors who submit returns based a typical calendar year, the exchange period may be truncated for a transaction beginning after October 17th. However, by applying for an extension on the return, the investor benefits from the full 180 days allowed by the code and will be able to defer capital gains on a transaction begun after October 17th. “We saw a spike in activity during the last quarter of 2013, and have been working hard to ensure our clients and their advisors understand how critical it is to watch not only transaction deadlines, but filing deadlines as well,” states Levine.
Peak 1031 Exchange, Inc. is a leading national provider of tax-deferred 1031 exchange services, specializing in all like-kind transactions including Simultaneous, Delayed, Reverse, Improvement and Personal Property exchanges. It is part of the Peak Corporate Network (http://www.peakcorp.com), a brand representing a group of entities providing a comprehensive array of commercial and retail real estate services nationwide including mortgage lending, loan servicing, short sale services, foreclosure services, insurance, real estate brokerage and escrow services. Peak 1031 Exchange, Inc. does not provide legal or tax advice. Always consult your tax or legal advisor regarding your specific transaction.