Guides
1031 Exchange Rules: The 45-Day and 180-Day Deadlines
The core 1031 exchange rules run on two clocks that start the day you close on the property you sell: you have 45 calendar days to identify replacement property in writing and 180 calendar days to close on it. Both deadlines are counted in calendar days, both are strict, and neither extends for weekends or holidays. Miss either one and the exchange fails, making the deferred gain taxable in the year of the original sale.
A Section 1031 exchange lets an investor defer capital gains tax, depreciation recapture, and the net investment income tax by reinvesting sale proceeds into like-kind real property. The deferral only holds if you follow the timeline and identification mechanics exactly. This guide covers both clocks, the three identification rules, the same-taxpayer requirement, and the reverse and improvement exchange variants. For the broader question of what qualifies and why real property is now the only eligible asset, see our Section 1031 like-kind exchange guide.
The 1031 exchange timeline at a glance
Both deadlines begin on the date the relinquished property transfers, which is usually the closing date. Day 1 is the day after closing. The 45-day and 180-day periods run concurrently, not back to back, so the 45 days are part of the 180, not added to them.
| Milestone | Deadline | Counted from | Extends for weekends/holidays? |
|---|---|---|---|
| Sale of relinquished property closes | Day 0 | N/A | N/A |
| Written identification of replacement property | Day 45 (midnight) | Closing date | No |
| Acquisition of replacement property complete | Day 180 (midnight) | Closing date | No |
| Alternative 180-day cap | Tax return due date, including extensions | Filing deadline | N/A |
The 180-day period has a second, often overlooked cap. You must acquire the replacement property by the earlier of 180 days or the due date of your tax return for the year of the sale, including extensions. An investor who sells in November and does not file an extension can run out of time well before day 180, because the April filing deadline arrives first. Filing Form 4868 or the business equivalent preserves the full 180 days.
The 45-day identification rule
Within 45 calendar days of closing on the relinquished property, you must identify candidate replacement property in a written document, signed by you, and delivered to your qualified intermediary or another party to the exchange (not your own agent or attorney). The identification must describe each property unambiguously, typically by legal description or street address.
The deadline is midnight of the 45th day. Treasury Regulation 1.1031(k)-1 makes clear these periods do not extend when the 45th day falls on a Saturday, Sunday, or legal holiday, unlike many other tax deadlines. Once the 45-day window closes, you generally cannot change your list, so the identified properties become the only ones that can complete the exchange.
The 3-property, 200%, and 95% identification rules
You may identify more than one replacement property, but you must stay inside one of three limits. Most exchangers use the three-property rule for its simplicity; the 200% and 95% rules exist for portfolios where the buyer wants a longer shortlist.
| Rule | What it allows | The constraint |
|---|---|---|
| Three-property rule | Identify up to 3 properties | No limit on their combined value; you may acquire any or all |
| 200% rule | Identify 4 or more properties | Combined fair market value cannot exceed 200% of the value of what you sold |
| 95% rule | Identify any number, any value | You must actually acquire at least 95% of the total value identified |
These rules are mutually exclusive escape routes, not stacked requirements. If you identify four properties and blow past the 200% cap, the identification is still valid only if you close on 95% of the identified value. A taxpayer who identifies too much value and acquires too little can void the entire identification, which is treated as if no property was identified at all.
The same-taxpayer rule
The taxpayer who sells the relinquished property must be the same taxpayer who acquires the replacement property. The name and tax identification number on the sale must match the name and tax ID on the purchase. Selling through a single-member LLC and buying in your own name can work because a single-member LLC is disregarded for federal tax purposes, but selling as an individual and buying as a corporation or a different partnership usually breaks the exchange.
This rule creates friction in estate and partnership planning. Partnerships hold title as the entity, so individual partners generally cannot peel off and do their own exchanges without advance restructuring, often called a “drop and swap,” which carries its own holding-period and step-transaction risk. The rule interacts with the carryover cost basis that follows the deferred gain into the new property.
Reverse exchanges: buying before you sell
A reverse exchange lets you acquire the replacement property before selling the relinquished property. Because you cannot hold title to both at once and still qualify, an Exchange Accommodation Titleholder (EAT) parks one of the properties in a special-purpose LLC under Revenue Procedure 2000-37. The safe harbor sanctions this “parking” structure as long as the timing rules are met.
The clocks still apply, measured from the EAT’s acquisition rather than a sale. Within 45 days of the EAT taking title to the parked replacement property, you must identify the property you will relinquish. Within 180 days, the EAT must transfer the parked property to you and the relinquished property must be sold. The safe harbor caps the total parking period at 180 days.
Improvement exchanges: building on the replacement
An improvement exchange, also called a construction or build-to-suit exchange, lets you use exchange proceeds to build or improve the replacement property before you take title. The EAT holds the property and acts as the builder of record while improvements are made, then transfers the improved property to you.
Two constraints matter. First, the same 45-day and 180-day clocks apply, so all improvements that count toward the exchange value must be completed and the property transferred within 180 days. Improvements finished after day 180 do not count toward reinvestment. Second, the 45-day identification must describe the planned improvements in as much detail as practicable, because you are identifying property that does not yet exist in its final form.
What happens if you miss a deadline
Missing the 45-day or 180-day deadline disqualifies the exchange. The proceeds become taxable in the year the relinquished property sold, and the qualified intermediary generally cannot release funds to you before the exchange period ends without triggering constructive receipt. The deferred gain includes capital gains tax, depreciation recapture taxed at up to 25% on real property, and potentially the 3.8% net investment income tax. Investors who intend to hold until death sometimes stack exchanges to defer indefinitely, because heirs may receive a step-up in basis that can erase the deferred gain entirely.
Frequently asked questions
Do the 45-day and 180-day periods run at the same time?
Yes. Both periods start on the day after the relinquished property closes and run concurrently. The 45-day identification period is the first 45 days of the same 180-day exchange period. They are not added together, so you do not get 225 days total. By day 45 you must have identified in writing, and by day 180 the acquisition must be complete.
Can the 45-day or 180-day deadline be extended?
Not in ordinary circumstances. Treasury regulations state the periods do not extend for weekends or holidays. The only common extensions come from IRS disaster relief notices, which can postpone deadlines for taxpayers in federally declared disaster areas. Absent a specific IRS notice covering your situation, the deadlines are firm and cannot be extended for hardship, financing delays, or negotiation.
How many properties can I identify in a 1031 exchange?
You can identify up to three properties of any value under the three-property rule. To identify four or more, you must either keep their combined fair market value at or below 200% of what you sold (the 200% rule) or commit to acquiring at least 95% of the total identified value (the 95% rule). Most exchangers rely on the three-property rule for its simplicity.
What is the same-taxpayer rule in a 1031 exchange?
The same-taxpayer rule requires that the party who sells the relinquished property is the same taxpayer, by name and tax identification number, who acquires the replacement property. A disregarded single-member LLC can bridge the two sides because it is not a separate taxpayer. Selling as an individual and buying through a separate partnership or corporation generally breaks the exchange.
How does a reverse 1031 exchange handle the deadlines?
In a reverse exchange under Revenue Procedure 2000-37, an Exchange Accommodation Titleholder parks the replacement property first. The 45-day clock to identify the relinquished property and the 180-day clock to complete the transfer both run from the date the EAT takes title, not from a sale. The safe harbor caps the parking arrangement at 180 days.
Does missing the deadline mean I owe tax immediately?
The gain becomes taxable for the tax year in which the relinquished property was sold, not the year the deadline passed. If the deadline falls in a later calendar year but the sale closed the prior year, the failure can require amending or reporting the gain on the original sale year. Because the qualified intermediary holds the funds, you generally cannot access proceeds early without triggering constructive receipt and voiding the exchange.
Reviewed by The Ledgerism Editorial Team. Last reviewed: July 2026.