Decoding the IRS rules for a ‘like-kind exchange’

(Be careful if your IRS tax return comes due before the 180 days; if so, make sure you take the automatic deduction.)

Now, to answer your question. Many tax lawyers say it’s acceptable to convert to residential within one year; others — including myself — say two years.

This is a confusing area of tax law, and you must consult a professional who has experience and knowledge about 1031 exchanges. And here’s a word of caution: There is a possibility that when Congress starts tackling tax reform, the 1031 exchange may be on the chopping block — in whole or in part. So if you have any interest in doing an exchange, I suggest you consider doing it soon.

NANETTE HOOGSLAG/GETTY ILLUSTRATION Section 1031 of the federal tax code allows a real estate investor to exchange one investment property for another investment property and defer the payment of any capital gains tax, but it’s a complicated transaction.