In order to complete a 1031 Exchange, there are strict timelines that you must abide by through various stages of the process. Missing one of these key dates could forfeit your ability to do a 1031 Exchange altogether, and there are almost no opportunities for extensions if a deadline is blown. With that in mind, the two most important numbers to remember are 180 and 45.
Once an investor sells their current property—called the “Relinquished Property”- they have exactly 180 days to close on their new property, which is called the “Replacement Property.”
In the first 45 of the 180 days, the investor is required to “identify” potential properties that they will buy as a replacement property. While this may sound highly technical, the investor must simply fill out a form that has the addresses or legal descriptions of the properties that they might purchase. This form will then be signed and sent to the Exchange Agent.
During the first 45 days, it's possible to amend this list if the investor changes their mind about a potential property, but at midnight of the 45th day, the list is locked in. From that point forward the investor must buy one of the properties identified on the sheet.
We are often asked if these dates can be extended, and there again, the answer to that question is almost always, “NO.” The only times when we have seen extensions granted have been during national emergencies, like Hurricane Katrina, Ike, and briefly during the COVID-19 pandemic. Outside of such a catastrophic event, the IRS does not grant any extensions or provide any grace periods.
Since there is no wiggle room with your 1031 Exchange deadlines, it's important to stay in regular communication with your Exchange Agent. Your agent's job is to ensure that you are on track to have your replacement properties correctly identified and ensure that your entire transaction closes within the 180-day timeline set forth by the government.
That's why the company you choose to handle your 1031 Exchange matters. You'll want to work with a Qualified Intermediary who is experienced, will regularly communicate with you, and will quickly answer all of your questions so that you don't make a mistake. If you are looking for a Qualified Intermediary who can serve you in this capacity, we invite you to contact us at (888) 508-1901 and schedule a time to meet our team. We'd be happy to talk with you and share how Brazos1031 Exchange can help you accomplish your goals, grow your portfolio, and ultimately build your family's wealth.