1031 exchanges · Deadlines
What is the 45-day rule in a 1031 exchange (and the 180-day rule)?
The short answer
The 1031 exchange 45-day rule requires investors to identify replacement real estate within 45 calendar days after transferring their relinquished property. The 180-day rule generally requires them to acquire the replacement property within 180 calendar days, or by the applicable tax-return deadline if earlier.
Read the full answer ↓When does the 45-day identification period begin?
Both deadlines begin when the relinquished property transfers. The 180-day period includes the first 45 days, rather than starting afterward.
Both clocks start at transfer
Day 0 → Day 45 → Day 180
Day 0
Relinquished property transfers
Day 45
Identify replacement property in writing
Day 180
Receive replacement property, or the earlier tax-return deadline
The 180-day period includes the first 45 days. It does not start afterward.
The identification period begins when the relinquished property transfers, usually at closing. Investors must provide a signed written identification to an eligible recipient, such as their qualified intermediary.
A valid identification generally describes the replacement property using its street address or legal description.
According to IRS Publication 544, investors can generally identify three properties regardless of value or use alternative identification limits. Under the IRS’s 200% rule, investors may identify more than three properties if their combined fair market value does not exceed twice the relinquished property’s value.
The 45-day deadline is measured in calendar days, not business days. An investor should therefore begin reviewing replacement properties before selling the original property.
How does the 180-day exchange rule work?
The two deadlines serve different purposes:
These requirements appear in the IRS Form 8824 instructions.
Example
For example, a January 1 transfer in a non-leap year generally creates a February 15 identification deadline and a June 30 exchange deadline, assuming no special relief or earlier tax-return deadline applies.
Investors who sell late in the tax year may need a tax-return extension to preserve the full exchange period.
Key 1031 exchange terms
- Identification period
- The 45-day window for formally designating replacement property.
- Exchange period
- The permitted timeframe for receiving qualifying replacement property.
- Qualified intermediary
- An independent party facilitating a deferred exchange.
- Replacement property
- Qualifying real estate acquired through the exchange.
- Relinquished property
- The investment or business real estate transferred to initiate the exchange.
- Deferred exchange
- A transaction in which you acquire qualifying replacement property after transferring the relinquished property, subject to IRS requirements.
What happens if an investor misses a deadline?
Missing the 45-day identification deadline or applicable acquisition deadline generally disqualifies a deferred 1031 exchange from its intended tax treatment.
The IRS may provide specific deadline relief for qualifying federally declared disasters or other designated events. Ordinary financing or closing delays do not automatically qualify.
With over 40 years of commercial real estate experience and a CCIM designation, I recommend screening replacement properties before the original sale closes. For investors comparing NNN real estate for sale, early screening can reduce avoidable delays.
Our guide to evaluating an NNN leased property explains important pre-closing checks. Review our NNN investment information before committing to a replacement property.
Key takeaways
- Replacement properties must generally be identified within 45 days.
- Acquisition must occur within 180 days or an earlier applicable tax-return deadline.
- Both periods begin with the relinquished property’s transfer.
- Late identification or closing can jeopardize tax deferral.
The clock starts when the original property transfers. The preparation should start well before that.
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