1031 Exchange Timeline Explained (45-Day Rule + 180-Day Close)
Quick Summary: The IRS allows you to defer capital gains tax on real estate by using a 1031 Exchange. But if you miss either the 45-day identification or 180-day closing deadline, you’ll owe the full tax. Let’s break down the timeline and help you defer smarter with our free calculator.
📅 Visual: 1031 Exchange Timeline
| Step | Description | Deadline |
|---|---|---|
| 1 | Close Sale of Original Property | Day 0 |
| 2 | Identify Replacement Property | By Day 45 |
| 3 | Finalize Identification | Day 45 |
| 4 | Close Purchase of New Property | By Day 180 |
📥 Download: 1031 Tax Deferral Calculator (.xlsx)
📥 1031 Exchange Capital Gains Calculator✅ 1031 Exchange Rules (What the IRS Requires)
- Like-Kind Property: Must be real estate for real estate, regardless of type.
- Qualified Intermediary (QI): Required to hold proceeds — you cannot take possession.
- Contract Clause: Include 1031 exchange language in sale and purchase contracts.
- Deadlines: Both 45-day and 180-day periods are calendar days from the closing date.
🔁 Reverse 1031 vs Standard Exchange
- Standard: Sell first, then buy new property within 180 days.
- Reverse: Buy first, then sell — more complex, requires escrow and QI early.
🧠 Pro Tips
- Use a spreadsheet to track deadlines and set calendar reminders.
- Always verify your 1031 eligibility with a CPA before closing.
- Consider a backup ID in case one deal falls through.
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Disclaimer: This article is for informational purposes only and does not constitute tax or legal advice. Consult a qualified intermediary or tax advisor.
