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1031 Exchange Timeline

1031 Exchange Timeline By The IRS

If you are looking to do a 1031 exchange to defer the capital gains tax on your rental property, then you must full understand the 1031 Exchange Timeline  that is required by the IRS. If these 1031 Exchange Timeline rules are not met, then you would be subject to the capital gains tax. The 1031 Exchange Timeline rules can be on commercial property, rental property, or vacation property. As long as it is not your primary residence, and you are looking to qualify for the 1031 exchange capital gains exclusion, then you must abide by the 1031 Exchange Timeline rules according to the IRS. We will go over the 1031 Exchange Timeline rules below, and if you have any questions, one of our qualified representatives can schedule and appointment with you to discuss your 1031 Exchange Timeline requires in more detail. Simply fill out the form below and we will contact you in a timely manner. 

1031 Exchange Timeline - 45 Day Rule

The 1031 Exchange Timeline 45 day rule is set by the IRS to ensure that you identify a replacement property in 45 days or less. The 1031 Exchange Timeline 45 day rule states you have 45 days to identify a like kind property on the day you current property closes and the funds are in a qualified intermediary. The qualified intermediary is a critical piece to ensure a successful 1031 exchange. You cannot take constructive receipt of the funds from the sale of your property. There are more in depth rules within the 1031 Exchange Timeline 45 day rule. These rules include:

  • 3 property rule
  • 200% rule
  • 95% rule

These rules state that you must identify 3 like ind properties, identify unlimited properties as long as the cumulative value does not exceed 200%, and identify unlimited amount of properties as long as you acquire 95% of the total value of the properties identified. These rules and 1031 Exchange Timeline requirements can be stringent and hard to accomplish. This is why we recommend to our clients that you do a 1031 exchange DST into a pool of investment properties. If you are not familiar with the 1031 exchange DST (Delaware Statutory Trust)  we can explain the process to you by submitting the contact form below. A 1031 Exchange DST can help alleviate come of these stringent rules and make the exchange process a quicker and pain free process. 

1031 Exchange Timeline - 180 Day Rule

The 1031 Exchange Timeline 180 day rule states that you have 180 days to close on your new properties once you have identified your replacement properties within the 45 day timeline. Once you have identified your replacement properties you have 180 day to close on your replacement properties within the 1031 Exchange Timeline in accordance with the IRS. If you are conducting a traditional 1031 exchange, and are lucky enough to identify your replacement properties within the 45 day timeline, then you must close on those properties within a 180 day timeline. There are many issues that may arise when trying to abide by the 1031 Exchange Timeline. You might find it extremely difficult to find your replacement properties, and within your 45 day 1031 Exchange Timeline. If you do find these replacement properties within the 45 day 1031 Exchange Timeline, then it is essential to close escrow on the new properties. There are many issues that could happen during this 180 day 1031 Exchange Timeline like the seller pulling out of the deal, or issues with paperwork. We find this circumstance many times, and the 1031 exchange falls through and you are stuck with the capital gains tax. This is why we advise those looking to do a 1031 exchange to look into a 1031 exchange DST investment. The 1031 exchange DST investment allows you to enter into a 1031 exchange, defer your capital gains tax, and invest into a pool of real estate properties and receive monthly distributions as if you were the property owner. 

1031 Exchange Timeline Not Met - Look Into A 1031 Exchange DST

If you feel like you will not be able to meet the 1031 Exchange Timeline, then we suggest doing a 1031 exchange DST investment. We can help you get educated on the 1031 exchange DST rules, qualifications, and investment strategy. Simply fill out the form below, email kyle@winthco.com, or call 805-583-2720 to schedule an appointment with a qualified representative today! 

1031 Exchange Timeline Questions

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