As we approach the holidays and the end of the year, we are all preparing and making New Years Resolutions for the coming year. Part of the preparation is getting ready to file your taxes. If you are in the middle of a 1031 exchange, or completed a 1031 exchange in 2023, there are a couple things to keep in mind.

Filing your completed 1031 Exchange



To file your 1031 exchange with your tax return, there are a couple items you will need. From your sale, the title company will issue a 1099 stating that you sold a property, alerting the IRS of the potential for capital gains taxes. To declare your exchange and defer the tax, you/your CPA will need to file Form 8824 with your tax return. In order to fill out Form 8824, you will need the closing statements from your sale and purchase/purchases, and your 45 Day Identification Letter. With these documents, you will be able to file your 1031 exchange and claim the tax deferral benefits.

In the middle of a 1031 Exchange at year end?

Many taxpayers will find themselves in the middle of their 1031 exchange at the end of the year. Many questions will arise, including “when do I need to file my exchange?” and “what year do I report the exchange in for my taxes?” There are a couple considerations and strategies to consider and discuss with your tax preparer if you find yourself in this situation.

180 Day Deadline is after April 15

With every 1031 exchange, there is a 180 Day exchange period in which the exchange must be completed. In the majority of exchanges, there will be no issue, but when an exchange is started between October 19^th and the end of the year, the tax filing deadline could potentially shorten the timeline of the exchange. The tax filing deadline would come before the conclusion of the 180 day period, so there is the potential for the exchange to not have been completed, but the tax return is due. If you find yourself in this situation, be sure to either complete your exchange prior to April 15^th, or file an extension on your tax return to be able to take advantage of the full 180 days.

Tax Straddling

One strategy that taxpayers often take advantage of is called tax straddling. This happens when a taxpayer sells a property in the later part of the year (Example: 2023), the exchange period carries them over into the following year (Example: 2024). When the exchange period expires and they are unable to purchase a replacement property, the QI returns the sale proceeds to the taxpayer. The taxpayer will then pay the capital gains taxes on the proceeds, but due to the exchange expiring in the following year (2024), they elect to file and pay the capital gains taxes with their 2024 tax return, rather than the 2023 return when the property was sold. This strategy allows the taxpayer to choose the year in which they file and pay the capital gains taxes. This is a strategy you will want to discuss with your tax preparer before getting into it.

Cheri Dosh’s professional career has always revolved around land and people. She first started in the oil & gas industry, working as an analyst for a geophysical exploration company. She then plied her trade in a different area of the land business, as mortgage loan officer. After learning the ropes concerning mortgages, she changed gears, shifting into the 1031 exchange side of real estate. Finally finding a home in the area of real estate she enjoyed the most, Cheri has continued doing 1031 exchanges for over 17 years.



Cheri lives in Aurora, with her loving husband, Barry. She has two adult children, Rachael and Danny. One works in Education and the other is involved in the Ministry. Cheri spends much of her time volunteering. She helped found, and served as a board member for Cherry Creek Academy, the first charter school approved in the Cherry Creek School District, and also served as the business manager of the Aurora Academy. Cheri has a particularly calling toward those who are most in need, helping the homeless and battered women; volunteering to help fill their physical, mental and spiritual needs, with various outreaches throughout Denver.