Let’s cover the basics of a 1031 exchange, starting with what it is: IRS Code Section 1031, referred to as a 1031 Exchange, is a sale and reinvestment of like-kind property so as to defer payment on any capital gains or losses.
Here are the major bullet points to know:
- Must be exchanged for LIKE KIND property.
- You have 45 days from the closing of your sale to identify which property you’ll be buying.
- You have 180 days from the closing of your sale to actually close on your purchase.
- If you’re selling multiple properties, the 45/180 days start from the sale of your first property.
- These deadlines can not be extended for any reason.
- Proceeds to be used from the sale on the next purchase must be held by a Qualified Intermediary.