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1031 Exchange Timelines & Rules

Measured from when the relinquished property closes, the Exchangor has 45 days to nominate (identify) potential replacement properties and 180 days to acquire the replacement property. 

While a like kind exchange does not have to be a simultaneous swap of properties, you must meet two-time limits, or the entire gain will be taxable. These limits cannot be extended for any circumstance or hardship except in the case of presidentially declared disasters.

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45 Day Identification

The first limit is that you have 45 days from the date you sell the relinquished property to identify potential replacement properties. The identification must be in writing, signed by you, and delivered to a person involved in the exchange like the seller of the replacement property or the qualified intermediary. However, notice to your attorney, real estate agent or persons acting as your agent is not sufficient.

180 Days To Complete

The second time limit is that the replacement property must be received and the exchange completed no later than 180 days after the sale of the exchanged property or the due date (with extensions) of the income tax return for the tax year in which the relinquished property was sold, whichever is earlier. The replacement property received must be substantially the same as property identified within the 45-day limit.

Identification Rules

As an Exchangor, you are required to provide in writing an “unambiguous description” of the potential replacement property prior to midnight on the 45th day (after the close of the first relinquished property).

A legal description or property address will suffice. If you wish to identify or purchase multiple properties, you must follow one of the following guidelines:

  1. Identify up to three properties of any value with the intent of purchasing at least one.

  2. Identify more than three properties with an aggregate value that does not exceed 200% of the market value of the relinquished property.

  3. Identify more than three properties with an aggregate value exceeding 200% of the relinquished property, knowing that 95% of the market value of all properties identified must be acquired.

A submitted purchase agreement is considered a sufficient identification.

Any properties purchased and closed within the 45-day time period qualifies as an identification.

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Time Requirements

45/180 Day Exchange Calculator

The time requirements in a 1031 exchange are very specific. From closing on the sale of the relinquished (sale) property, a taxpayer must:

  • Properly identify potential replacement properties within 45 calendar days (the” Identification Period”) and

  • Close on the replacement properties within 180 calendar days of the relinquished property sale – OR – the due date (including extensions) for the taxpayer’s tax return for the taxable year in which the relinquished property was transferred, whichever is earlier (the “Exchange Period”)

Based upon the closing date submitted,

the 45-day Identification Period and 180-day Exchange Period deadlines are shown

 

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