Can the taxpayer do a multiple leg exchange?
Yes, several relinquished properties may be exchanged for a single property. One relinquished property may be exchanged for several replacement properties. The important thing is that the exchange be part of a unified exchange agreement from the beginning. The 45-day identification rule and the 180-day replacement rule will start running from the date of the sale of the first relinquished property. Sometimes because of this timing issue it is better to structure the exchange as a series of exchanges rather than a multiple leg exchange.
Related Questions
- What happens if the taxpayer is in escrow to sell the relinquished property and then decides the want to make it part of a tax-deferred Exchange?
- What happens if the taxpayer changes their mind about buying a replacement property and wants to cancel the exchange?
- What is a related party and can the taxpayer do an exchange with them?
