Counting Days in a 1031 Exchange

For anyone who wants to complete a #1031 exchange and defer capital gains taxes on the sale and replacement of investment or business property, timing rules are critical to understand. One big one that often catches investors off guard has to do with elapsed time for the 1031 transactions.

Internal Revenue Code requires that you identify your replacement property (or properties) within 45 days of closing on the sale of your old property. But how are those days calculated?

The IRS is clear that the 45 days are calendar days, and no dates are excluded from the calculation. If your 45th day falls on a weekend or holiday, that day is still the deadline for identification of new properties. If you miss the deadline, even if by one day, the IRS will disallow your exchange. They don’t entertain extension requests, either.

Days are counted the same way for the 180-day deadline for closing on replacement property, so plan accordingly and avoid unexpected tax consequences.

If you’re considering a 1031 exchange, please visit our website to learn more about the exchange process, our qualified intermediary services and how we can help you find and close on your next 1031 exchange property.