How Do You Calculate Deadlines 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. 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 deadlines calculated? Do you include or exclude weekends and holidays? Are there other exceptions you need to consider?

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.

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If a 1031 exchange is in your future, visit our website to learn more about these powerful tax deferral tools and our qualified intermediary and replacement property locator services.