1031 exchange checklist: Day 0 to Day 180

By Tom, CPA · Updated October 27, 2026

Part of: Rental Property Taxes

TL;DR: Hire a qualified intermediary before you close the sale. From the day the relinquished property transfers, you have 45 days to identify replacement property in writing and 180 days (or your return due date with extensions, if earlier) to close. Neither deadline extends for weekends or holidays. Then report it on Form 8824.

Educational only, not tax, legal, or investment advice. Examples are illustrations, not predictions. Rules and limits change; verify current figures and talk to a qualified professional about your situation.

A 1031 exchange is like a relay race where the baton is your capital gain and dropping it costs 15% to 25%, plus state tax. The rules are simple; the deadlines are brutal and unforgiving. This is the checklist version. For the concepts, start with 1031 exchange basics.

CPA Warning Label: The deadlines don't bend. Touching the proceeds, missing day 45 or using your own agent as QI can turn a deferral into a full tax bill.

Before listing: QI engagement

• Confirm the property qualifies. Section 1031 covers real property held for productive use in a trade or business or for investment, exchanged for like-kind real property. Since 2018 it is real property only. Flips and dealer inventory don't qualify. Your home doesn't qualify (that's section 121).
• Hire a qualified intermediary (QI) before closing. Under Treas. Reg. 1.1031(k)-1(g), if you touch the sale proceeds, even briefly, you have constructive receipt and the exchange fails. Your agent, attorney, accountant or employee within the past two years generally cannot serve as QI (disqualified person rules).
• Sign the exchange agreement and assignment of the sale contract to the QI before the sale closes. Tell the title or escrow company there is an exchange.
• Ask about QI safeguards: segregated accounts, fidelity bonding, insurance. QIs are lightly regulated in many states, and exchange funds have been lost in QI failures.
• Plan the debt and cash. To fully defer, buy replacement property of equal or greater value, reinvest all net cash, and replace debt with new debt or added cash. See 1031 boot explained.
• Start shopping. 45 days is short. Many exchangers line up candidates before the sale closes.

Day 0 closing

• The clock starts the day you transfer the relinquished property (generally the closing date). If you transfer multiple properties, it starts with the first transfer.
• Proceeds go directly from escrow to the QI. Do not take a check for "a little cash for the kids' tuition." That is taxable boot.
• Calendar both deadlines immediately: Day 45 and Day 180. Example: closing on March 3, 2026 gives a 45-day deadline of April 17, 2026 and a 180-day deadline of August 30, 2026.
• Check your tax return due date. If the sale is late in the year, the return due date (April 15) can be before day 180. File an extension to get the full 180 days.
• Keep the settlement statement. It drives Form 8824.

Day 45 identification rules

• Identify replacement property in a written, signed document delivered by midnight of day 45 to the QI or another person involved in the exchange who isn't a disqualified person. An email to your cousin doesn't count.
• Describe each property unambiguously: legal description, street address or distinguishable name.
• Stay within the limits: up to three properties of any value, or any number if their total value doesn't exceed 200% of the relinquished property's value, or more than that if you actually acquire 95% of the value identified. Detailed rules in 1031 identification rules.
• Property you acquire within the 45 days counts as identified.
• You can revoke and replace an identification in writing before the 45-day deadline, not after.
• No extensions for weekends or holidays. Only federally declared disasters can postpone deadlines, by IRS notice.

Day 180 closing

• Close on identified property by the earlier of day 180 or your return due date including extensions.
• The QI wires funds to the replacement closing. Title goes to the same taxpayer that sold (the same tax entity; a single-member LLC disregarded entity is generally the same taxpayer as its owner).
• Buy property substantially the same as what you identified. If you identified a lot and then build on it, special rules apply.
• Leftover cash at the QI after closing is boot; it's released to you per the exchange agreement and the 1.1031(k)-1(g)(6) restrictions.
• Need to buy before selling? That is a reverse exchange under Rev. Proc. 2000-37.

After closing: the year-after checklist

• Start depreciation on the replacement property using the carryover schedule plus a new schedule for added basis.
• Update insurance, property tax mailing addresses and the rental's books.
• Keep the QI agreement, identification letter, both settlement statements and the 8824 in one permanent folder.
• Decide on the hold period. Selling the replacement quickly invites a question about investment intent, and a related-party exchange has its own two-year rule.
• If you plan to move in someday, read combining 1031 and 121 first, because of the five-year rule.

Form 8824

• File Form 8824 with your return for the year the relinquished property transferred, even if the replacement closed the following year.
• Part I: property descriptions and dates (including identification date and receipt date). Part II: related-party questions. Part III: realized gain, recognized gain (boot) and basis of replacement property.
• The replacement property's basis is generally its cost minus deferred gain. Its depreciation continues from the old schedule for the carryover basis, with a new schedule for any added basis (Treas. Reg. 1.168(i)-6).
• Recaptured depreciation and gain remain deferred, not forgiven. Keep the 8824 forever; you'll need it when you sell the replacement.
• Related-party exchanges require Form 8824 for two more years. See related-party rules.

Illustration (made-up numbers): Fran sells a rental on June 10, 2026 for $600,000 with $200,000 adjusted basis and a $250,000 mortgage paid off at closing. Net proceeds of $340,000 (after $10,000 costs) go to the QI. By July 25 (day 45) she identifies three condos. On October 1 she closes on one for $650,000 using the $340,000 plus a new $310,000 loan. No cash boot, no net debt relief, so the $390,000 realized gain is deferred and her new basis is $650,000 minus $390,000 = $260,000.