As we enter November every year there are a variety of questions that come from investors involved in a §1031 exchange. Many are focused on trying to strike a deal for their replacement property before year end. Other investors may also be stressed to accomplish the closing of the replacement property prior to year end.

November 3, 2025

By Al DiNicola, AIF®
1031 Tax Deferred Exchange Specialists & DST Advisor
NAMCOA® – Naples Asset Management ~Company®, LLC
Securities offered through MSC-BD, LLC, Member of FINRA/SIPC

The title of this article is actually a false statement. While there are timing deadlines in a §1031 exchange, the end of a calendar (or tax year) is not a deadline.

So as a quick review, let’s look at the two key deadlines with regard to a §1031 exchange. The deadlines are from the date that you sell or close on your relinquished property. The first is the deadline to identify the potential replacement property (properties) that you may want to acquire. This deadline is 45 days from the date that you closed on the relinquished property. The second deadline is 180 days. The 180 days occasionally gets confused as to when the 180 days starts. Is it from the end of your 45 days or is it 180 days from when you closed on the relinquished property? Well, it’s 180 days from when you closed on the relinquished property. And those are total days. There’s no days off for holidays, weekends, your birthday or anything else. Repeated, 180 days from when you close on your relinquished properties. However, there are situations where you have less than 180 days to complete your exchange.

If the due date of your federal income tax return, which is typically April 15th, (plus a few days depending on the year), is before 180 days then you have less than 180 days. In this case, the exchange is shortened to the tax date that your filing is due. There is always the opportunity to extend your date for filing your taxes. Typically, there’s an automatic extension until October 15^th if you file for the extension. This may come in handy in the event you are closing near the end of the year or in the beginning of the year on your relinquished property.

So, let’s take a look an example. Let’s say you sell your property this year and you close on it December 15^th, 2025. Normally, your 180th day would be June 13th, 2026. But your tax return for 2025 is due April 15th, 2026. However, unless you file an extension, your exchange period ends April 15th, 2026. You can enjoy a total of 180 days by filing an automatic extension on your taxes for calendar year 2025. Please consult your tax consultant or CPA to ensure you file the right form. Form 4868 is for individuals and Form 7004 would be for entities.

There may be other reasons why the IRS could extend or shorten the exchange deadlines. These would be through special relief notices in the case of a disaster. We have seen this over the past few years with flooding in North Carolina, hurricanes in certain parts of the country and any other disaster, such as the wildfires in California last year.

So as a quick summary, you have less than 180 days to complete a §1031 exchange when your tax return date is due without extension that comes before the 180-day period ends.

So, the question we get often is regarding any advantage of completing your §1031 exchange in the same tax year as closing on the relinquished property? This is an excellent question, and occasionally investors may overlook this situation. There may be practical or strategic advantages and maybe in some cases, disadvantages of completing a §1031 exchange in the same tax year as your relinquished properties. There is actually no direct IRS benefit to completing the 1031 exchange in the same year.

There are potential advantages completing the exchange in the same tax years. Let’s take a little deeper analysis. Some CPAs would like for you to do this because it may simplify their tax reporting (if you hire someone to do your taxes). You would report the entire exchange on one tax return the same year as the sale. You only file Form 8828 which is a “like kind exchange” once converting both the relinquished and replacement property. The issue you would avoid would be filing for an extension and you could potentially deal with a completed exchange at tax times. For an example, if you sell a March of 2025 and you buy in July of 2025, all would be reported neatly on your 2025 returns. You as well as your CPA professional may enjoy not needing to file a tax return extension.

If your exchange goes into the next tax year, you’ll often need to file an extension to preserve the full 180 day. Completing the exchange in the same tax year avoids that stepped entirely. Please consult the right form for filing for individuals versus entities as previously mentioned. There may also be clearer or cleaner accounting and record keeping. Both transactions would fall into the same accounting year and this may make it easier for basis adjustments and property records. Booking for entities such as LLC, partnership etc. may become easier as well as making depreciation schedules a little easier.

When the sale and purchase occur in different years, it sometimes raises flags or could cause misunderstandings. If your return doesn’t clearly show the full picture of the exchange, there may be IRS scrutiny and confusion. Keeping both in one year keeps things straightforward.

There may be neutral points or potential disadvantages. The timing doesn’t change your deferral, so there’s no extra tax benefit. As long as the exchange meets the IRS requirement, it’s fully taxed deferred whenever it spans two tax years, not one. So, what about cash flow timing? If you close your sale late in the year, you might prefer to push your replacement purchases in the next year to manage cash flow or depreciation timing. Why would you want to do that? Well, you may for example want to start depreciation later or time to recognition income differently. There may also be time pressures for late sales in the end of the year November or December closings. You have limited time before tax seasons, potentially forcing you to choose between completing the exchange quickly or filing extension to keep the 180-day full window open.

Here is a summary table.

What could the bottom line be? Well, potentially finishing your 1031 exchange in the same tax year is administratively simpler and offering cleaner for reporting. But remember, there’s no tax rate or deferral advantage. If your transaction timing naturally fits within one year, that’s great. However, the word of caution is it’s not worth forcing it for just that reason. Acquiring the correct replacement property or properties needs to be the primary focus of any 1031 exchange. Accredited investors who have completed their due diligence on Delaware Statutory Trust (DST) and work with a advisor who is focused on DSTs may provide for the quick delivery or solutions to closing on a replacement property.

As always contact us for more information and a complimentary consultation.

Alternative investments and DSTs are not for all investors.  The acquisition of a certain alternative investments including DSTs is for accredited investors only.  Contact your investment adviser for additional details on how a DST may be a solution to your §1031 Exchange and suited for your investment future. For more information on how to properly set up an IRC §1031Tax Deferred Exchange or if you are an accredited investor and would like additional information on a DST contact Al DiNicola at 239-691-8098 or email adinicola@namcoa.com.

NAMCOA® is a SEC registered investment advisory firm that provides comprehensive portfolio management, financial planning, and fiduciary decision-making services on behalf of retirement plan sponsors. Our Difference is summarized by our fiduciary approach which enables us to better meet portfolio and retirement plan objectives, resulting in stronger risk adjusted returns for investors and peace of mind for Clients. We also focus on alternative real estate investment. Many real estate investors are seeking tax deferred solutions utilizing §1031 exchanges or Opportunity Zones.

This is not an offer to purchase or solicitation to purchase any security, as such be made only through an offering memorandum or prospectus.  Investing in securities, real estate, or any investment, whether public or private, involves risk, including but not limited to the potential of losing some or all of your investment dollars when you invest in securities. You should review any planned financial transactions that may have tax or legal implications with your personal tax or legal advisor.   NAMCOA, LLC is a Registered Investment Advisor, regulated by SEC (Securities and Exchange Commission). Our corporate office is located at 999 Vanderbilt Beach Road, Suite 200, Naples Florida 34108. Securities Offered through MSC-BD, LLC, Member of FINRA/SIPC. 5 Centerpointe Drive, Ste. 400 Lake Oswego, OR, 97035MSC-BD, LLC and NAMCOA are independently owned and are not affiliated.

Thank you.