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Updated: Oct 17, 2020
In its most straightforward format of a delayed or forward exchange, the exchangor must follow a strict timeline. The key checkpoints are 45- and 180- days after the sale of the relinquished property. If the exchangor misses either date, the exchange fails, and the taxpayer has constructive receipt of the sales proceeds.
The first hurdle after the sale is day 45. If you know which property you will buy, there is no need to wait - purchase the replacement property. However, if you cannot close by day 45 from the sale, you will need to identify your replacement. Identifying property can follow a handful of rules, allowing you to list more than one property; the caveat is you may only purchase property that was identified by day 45. All purchases must be made by day 180.
Despite limited real estate inventory, transactions happen every day. If you are looking to complete an exchange when you sell, you should already be searching for the replacement property. Because of the limited timeframe and lower number of listings, some clients wait to list their property until they have a replacement under contract. Knowing your replacement property early on in the exchange relieves a lot of undue stress for the exchangor.
The repurchase timeline is a critical component of completing a 1031 exchange, but it is not the only requirement to defer all of your taxes from the sale. As an experienced Qualified Intermediary, Advantage Wealth Solutions Exchange, LLC works with you to properly administer your exchange. Done correctly, you will meet all the fundamental principles to defer taxes and keep more of your wealth working.