From when the relinquished property sells, a 1031 exchanger has 180 calendar days to complete their process and take title to their replacement property(ies). In addition, a 1031 exchanger must properly identify their potential replacement properties within 45 calendar days of their sale.
There is some nuance and detail to consider here.
Let’s get started.
45 Days to Identify
This is often the most difficult rule for our clients.
After you sell, the IRS requires that you officially identify (in writing) what you might buy next.
You only get 45 days after closing.
Failure to identify properly means you fail your exchange.
No ifs, ands, or buts.
We beg you to take this requirement seriously.
In some cases, so-called 1031 “rules” are actually “best practices”
They are open to interpretation.
Not the 1031 deadlines.
These are set in concrete.
To make this easier, we have our clients use an interactive online ID form:
We’ll explore this form a little further soon.
That’s because you need to know the 3 – Property Rule.
(Note: A signed contract, letter of intent, or other negotiated agreement can count as your identification so long as the property is unambiguously described therein)
180 Days to Close
This is the other big deadline.
After you sell, the IRS gives you 180 calendar days to complete your 1031 exchange. (In other words, you have 135 days after the end of your identification period)
When they IRS said “exchange completed” within 180 days, they mean 100% completed.