What are the time requirements in a reverse exchange?
After the EAT’s purchase of the Replacement Property, the Client has 45 days to identify potential relinquished property that Client intends to sell to complete the reverse exchange and defer capital gains taxes thereon. After entering into a contract, the Relinquished Property must be sold and title to the Replacement Property must be transferred from the EAT to the taxpayer within 180 days of the purchase of the Replacement Property, or the due date for the taxpayer’s tax return for the taxable year in which the transfer of the Relinquished Property occurs, whichever is earlier. If the tax return date (usually April 15) occurs prior to the expiration of 180 days, then the taxpayer may file for an automatic extension to obtain the benefit of the full 180 day exchange period.
