The Basics of a 1031 Deferred Exchange

Basics of a 1031 Deferred Exchange
Days Timeline

0 - 45 Days

Timeline 1 : Identification Period

This is the crucial period during which the party selling a property must identify other replacement properties that he or she proposes or wishes to buy. This period commences exactly 45 days from the escrow closing date of the relinquished property. This 45 days timeline must be followed and is not extendable in any way including if the 45th day falls on a Saturday, Sunday or legal holiday. If the 45th day falls on a Saturday, Sunday or legal holiday you should plan on having your 45 day letter into your accommodator on the business day prior.

Days Timeline

45 - 180 Days

Timeline 2 : Exchange Period

This is the period within which a person who has sold the relinquished property must purchase the replacement property. This time period is referred to as the Exchange Period under 1031 exchange (IRS) rule. It ends at exactly 180 days after the date on which the person transfers the property relinquished or the due date for the person's tax return for that taxable year in which the transfer of the relinquished property has occurred, whichever situation is earlier. The 180 day timeline has to be adhered to under all circumstances and is not extendable, even if the 180th day falls on a Saturday, Sunday or legal holiday.

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