The second most important date after the 45-day designation period is the 180-day period of safe- harbor. Once the Exchanger has designated their properties (See 45-Day designation), the next steps in the process are obtaining the purchase agreement and closing on one or more of the properties designated.

Section 1031 of the Internal Revenue Code allows a period of 180 days or the due date of the taxpayers income tax return as the time allocated to complete the 1031 exchange transaction once relinquished property is sold. If the filing of your tax return limits the amount of time to complete your transaction then it may be possible to schedule an extension of your taxes through your accountant. The closing must then be complete within the 180 day period.

The 180-day calculation begins the day the property is transferred and includes weekends and holidays for calculation.

Example:

Sale: 1/1/06

180 days: 6/29/06 midnight

Any closing that takes place after the 180 day may not be covered under the Section 1031 provisions and may be considered boot.

The IRS does from time to time issue extensions due to natural disasters so if the taxpayers transactions is delayed and they believe that their area (specific state and county) has been affected they may want to check their website for any notices. (www.irs.gov) In Florida, as a result of the hurricanes we have had numerous extensions.