1031 Exchangers Need to Prepare for 1031 Exchange Delays
Effective this August 1, 2015, the new TRID (TILA-REEPA Integrated Disclosure) form replaces the current HUD-1 settlement form. Real estate and settlement agents should be training now to prepare for this change. Unforeseen problems from the changes could disrupt or delay the closing process.
Taxpayers doing a 1031 exchange should be aware that the changes might impact the 1031 exchange time limits. Of concern are:
- First, federal agencies involved recommend planning for an extra 15 to 30 days to settle sale or purchase transactions. Since the replacement property must be transferred/settled within the 180-day exchange period, exchangers should allow for these extra days to ensure they get to settlement on their replacement property on time.
- Second, if there are any changes, regardless how minor, to the TRID forms at the settlement table, the new rules require a three-day waiting period. Routine changes made at the closing table to any TRID document may cause a three-day delay. 1031 exchangers need to be fully aware that the deadlines for a 1031 exchange are exclusive to delays in settlement.
Plan to close your 1031 exchange well within the 180-day deadline