A common tax planning tool for real estate transactions is to
engage in a like-kind exchange of real estate. If structured
properly, a taxpayer can sell real property (the relinquished
property) and replace it with new property (the replacement
property") of a like-kind without having to recognize
gain on the sale of the relinquished property. For example, a
senior living property owner could sell a facility in Florida and
use the proceeds to acquire a new facility in Georgia.
One of the requirements for structuring a like-kind exchange
properly is that the taxpayer has to acquire the replacement
property within 180 days. For sales of relinquished property
that occur in the fourth quarter of the year, this can result in a
trap for the unwary that could result in the transaction becoming
fully taxable. While the statute does generally provide for a
180 day replacement period, the period is actually the period that
ends on the earlier of (i) 180 days from the sale
