Once the Replacement Property is selected, the investor has 180 days from the date the Relinquished Property was transferred to the buyer to close on the new property. If the due date on the investor's tax return, with any extensions, for the tax year in which the Relinquished Property was sold is earlier than the 180-day period, then the 1031 exchange must be completed by that date.
Investors should also remember that a portion of this 180-day period may already have been used during the 45-day identification period. There are no extensions and no exceptions to the 45-day rule, which includes weekends and holidays. If the time limit is exceeded, the entire exchange can be disqualified, and penalties and taxes will follow.
If an investor is purchasing a fractional interest in more than one property, it is advisable to make sure that the scheduled closing dates are prior to the deadline.
Tenants in Common Exchange Deed and Title Insurance
As an owner in a TIC, you will receive a separate deed as a tenant in common and a title policy insuring your percentage of interest in the property. You have the same rights as any other single owner.
Cash Flow and Appreciation Potential From a Tenants in Common 1031 Exchange
There is potential for income in proportion to your fractional ownership, which could potentially be greater than the cash flow you received from your past investments. Cash flow may be offset by the depreciation of your basis in the new purchase.
You also share in the pro-rata appreciation, if any, of the property if it is eventually sold. A TIC is considered a valuable estate planning tool as your heirs should receive a stepped-up basis upon your demise.
