How Do Timelines Work in a 1031 Exchange?

A 1031 exchange has two deadlines: 45 days to identify your replacement property and 180 days to complete your purchase. Both start the day your relinquished property closes, and both run at the same time.

Day 0: your sale closes

The clock starts when your relinquished property closes. Your exchange has to be set up before this point, with your sale proceeds going directly to your Qualified Intermediary. If the funds come to you first, the sale can't be converted into an exchange.

Being under contract doesn't start the clock. Only the closing does.

Day 45: identification is due

By midnight on day 45, you need to identify your potential replacement properties in writing. The identification has to be signed by you and delivered to your QI, and each property has to be clearly described, usually by street address or legal description. "A fourplex in San Diego" isn't enough.

You can change your identification as many times as you like until the deadline. After day 45, it's locked.

There are three ways to identify:

• Three-property rule: identify up to three properties of any value.

• 200% rule: identify more than three, as long as their combined value doesn't exceed 200% of what you sold.

• 95% rule: if you identify more than three and exceed 200%, you must end up buying at least 95% of the total value you identified.

Most investors use the three-property rule. If you close on a replacement property within the 45 days, it counts as identified.

Day 180: the last day to close

Day 180 is the last possible day to close on your replacement property. You have up to and including that date to complete your replacement purchase or purchases, and you can only buy property you identified by day 45.

The 180 days include the first 45, so if you use all 45 days to identify, you have 135 days left to close.

The tax return due date

Your exchange period ends on day 180 or on the due date of your tax return for the year of the sale, whichever comes first. For individuals, that matters for sales after about October 17, when day 180 falls past April 15. Filing an extension gives you the full 180 days.

Weekends, holidays and extensions

Every calendar day counts. If day 45 or day 180 falls on a weekend or holiday, the deadline doesn't move.

The only exception is a federally declared disaster. When the IRS issues disaster relief, taxpayers in the affected area, and in some cases others who are directly affected, may have their deadlines postponed. The relief isn't automatic, so if you think it applies to you, talk with us and your CPA.

What happens if you miss a deadline

If you don't identify by day 45, or don't close on an identified property by day 180, the exchange ends and the sale is taxable. Your QI then returns the funds, subject to the timing rules in your exchange agreement.

Plan your dates

Use our 1031 Exchange Timeline Calculator to see your day 45 and day 180 dates, and connect us with your closing agent to get your exchange set up before your sale closes.

APX 1031 is a Qualified Intermediary. We don't provide tax or legal advice; talk with your CPA or attorney about your situation.