X

"LIke Kind" IRS 1031 Exchange Basics

If you own business or investment property and want to reduce or eliminate the amount of capital gains tax that you will pay on the sale of your property, you should consider the benefits of participating in a tax-deferred 1031 exchange.

How long do I have to identify replacement property?
The replacement properties must be identified within 45 days after the sale of the relinquished property. This requirement is strictly enforced and no extensions are possible. Identification must be in writing, signed and dated and received by 1031 exchange manager no later than 45 days after the sale of relinquished property. Replacement property must be identified unambiguously. Usually, either a legal description or a mailing address is sufficient.

How long do I have to purchase the replacement property?
The replacement property must be purchased within 180 days after the sale of the relinquished property. This requirement is strictly enforced and no extensions are possible. The time period may be shorter if you are required to file a tax return prior to the expiration of the 180 day period and you do not seek an extension to file your return.

Am I limited to how many properties I may identify?
The IRS limits the number of properties you may identify. You are basically limited to identifying 3 properties. You may identify more than 3 properties if the combined fair market values of the properties you identify do not exceed two times the sales price of the relinquished property.

View our FAQs page to learn more about the IRS 1031 exchange process and read the most common questions about exchanges.