A 1031 exchange can defer a significant tax bill — but only if you hit two hard deadlines that start ticking the day your sale closes. Miss either one, or touch the money, and the deferral can be disqualified. The rules are strict and individual, so this is general education, not tax advice; work the timeline with your own qualified intermediary and CPA.
Day 0: your sale closes
The clock starts when the sale of your relinquished property closes. From that moment, two deadlines run in parallel — they do not reset, and weekends and holidays count.
45 days: identify your replacement
Within 45 calendar days, you must identify your replacement property (or properties) in writing, signed and delivered to your qualified intermediary. You can't just have one in mind — it has to be formally identified. Two common ways to do it:
- Three-property rule. Identify up to three properties of any value, and you can close on any or all of them.
- 200% rule. Identify any number of properties, as long as their combined value is no more than 200% of what you sold.
This 45-day window is the tight one — finding and committing to replacement property in six weeks is why so many exchanges feel rushed, and why planning before you sell matters.
180 days: close the exchange
You then have 180 calendar days from the sale (or your tax-return due date including extensions, whichever is earlier) to close on the replacement property and complete the exchange. The 180 days runs from the sale date — it is not 180 days after the 45-day mark.
You can't touch the money
Between the sale and the purchase, you cannot take receipt of the proceeds. A qualified intermediary (QI) — an independent third party — holds the funds and handles the exchange paperwork. If the cash hits your account, even briefly, the exchange generally fails. Engaging the QI before closing the sale is essential.
Where a DST helps against the clock
Because the 45- and 180-day windows are so tight, some investors use a Delaware Statutory Trust (DST) as replacement property — it can be faster to close than locating and acquiring a whole building yourself, and a DST interest can qualify as like-kind. A DST is a security, available only to accredited investors, and it's illiquid, fee-bearing, and carries risk including loss of principal. It can ease the timeline pressure; it doesn't remove investment risk, and it isn't right for everyone.
The one thing to remember
Deadlines this strict reward planning and punish improvisation. The best exchanges are set up before the relinquished property sells — QI engaged, replacement options understood, advisors at the table. See the step-by-step process for how it fits together.
Keep going: what a 1031 exchange is, DST basics, or what you'd owe if you just sold.