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How long can a 1031 Exchange defer taxes? |
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 Many people often wonder if there is a time limit on how long you can own a 1031 exchange property and still legally defer taxes. This is a very reasonable question to ask especially when you consider how important timing is to a successful 1031 exchange. There is also those pesky deadlines to consider as well.
In a nutshell, there is no set time limit on how long you can hang onto a 1031 exchange property to continue deferring your capital gains taxes. The concept is similar to a 401K plan whereby you don't need to worry about paying Uncle Sam until you start to extract capital from the 401k plan. Similarly, you need not worry about paying taxes on a 1031 exchange investment until that investment is liquidated. Conceivably, you could defer paying the capital gains tax on your 1031 investments for your entire life! Of course, its never quite as simple as we hope, and the tax man will get what's coming from either you or your estate. 1031 exchange transactions are complicated and need careful consideration by professionals in order to preserve your tax deferral status under Section 1031 of the Internal Revenue Code. If you have questions about other timing related matters on 1031 exchanges we strongly suggest you get in touch with a 1031 exchange professional. |
