What are the consequences of not completing the exchange in time?
According to IRS guidelines, the exchange becomes null and void if the replacement property has not been designated within 45 days of closing on the relinquished property or if the exchange acquisition exceeds the allotted 180 days. All funds will be returned to the investor minus nominal exchange fees. The IRS will view the attempted exchange as a sale. As a result, the taxpayer will be responsible for paying all capital gains on the transaction.
