1031 Exchange Rules
1031 Exchange Rules:
In a 1031 exchange, the IRS sets strict time limits that you must follow to successfully defer capital gains taxes. The two key deadlines are:
1. 45-Day Identification Period
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You must identify the replacement property (or properties) within 45 calendar days of the sale of your original (relinquished) property.
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This identification must be in writing and delivered to the qualified intermediary (QI).
2. 180-Day Exchange Period
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You must close on the purchase of the replacement property within 180 calendar days of the sale of the relinquished property.
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This 180-day period includes the 45-day identification period.
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The clock starts ticking the day after the sale of the relinquished property.
🔔 Important: In the 1031 Exchange Rules, These deadlines are calendar days, not business days, and there are no extensions unless there’s a federally declared disaster.
Why the 45‑day / 180‑day rules hold?
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The IRS regulations require that you identify your replacement property in writing within 45 calendar days after selling (“relinquishing”) the old property.
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You must close on the replacement property (or properties) within 180 calendar days of that sale (or by the due date of your tax return, whichever is sooner) to maintain the tax deferral.
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These two windows run concurrently, not one after the other. Meaning the 45‑day identification is part of the 180‑day total period.
Check out the IRS Tax Code for details and or changes: IRS 1031 Exchange Rules
Are the 1031 Exchange Time Limits Really Set in Stone?
Yes — those 45-day and 180-day deadlines for a 1031 exchange aren’t just general guidelines; they’re actually written into U.S. tax law and IRS regulations.
According to Section 1031 of the Internal Revenue Code, once you sell your original property, you have:
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45 calendar days to identify your potential replacement property (in writing), and
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180 calendar days to close on that new property.
These timelines run at the same time — meaning the 45 days are part of the 180-day window, not added on top.
The IRS regulations (specifically Treasury Regulations back this up. They make it clear: if you don’t stick to these deadlines, your exchange won’t qualify, and you could be hit with capital gains taxes.
One important detail: if your tax return is due before the 180-day mark, you’ll need to complete the exchange by your return’s due date — unless you file for an extension.
NOTE: Make sure you contact your CPA or accountant for details and information for your specific situation.
Can You Use a 1031 Exchange on a Primary Residence?
Nope. The 1031 exchange rules do not apply to your primary home or any property held for personal use, like a vacation house you stay in or a second home you don’t rent out regularly.
To qualify for a 1031 exchange, both the property you sell and the one you buy must be:
✅ Held for investment (like a rental property),
✅ Or used in a trade or business (like an office building or commercial space).