Too Late for 1031 exchange?

[Matthew Holland]

I just sold an investment property that I received through a foreclosure a few months prior.  We did a quick all-cash close and I didn't even consider the idea of doing a 1031 exchange for this property.  COE was a couple days ago and I have already received the funds into my bank account.  

Question for the BP community:

- Is it too late to initiate a 1031 exchange even though COE has already happened?  My understanding is that you need to use a qualified intermediary before closing who will hold the 1031 funds in separate escrow account.  

I held this property for less than a year and I'm really hoping to minimize the short term cap gains taxes (Fed+CA) that I will likely owe.  I will definitely do better tax planning next time.  Any suggestions would be appreciated!

[Dave Foster]

@Matthew Holland, Sorry but the Qualified intermediary must be involved prior to the closing of the sale.  When you closed without two things happened - 1. There was no documentation to the 1031 on the settlement statement.  And 2. you received receipt of the funds.  Both of those disqualify your transaction from a 1031. 

It's small consolation but remember no one ever went broke paying tax on profit.