How do the 45-day and 180-day deadlines work in a 1031 exchange?

By Claud Cornetti, CPA · Licensed in New Jersey and New York

Published 19 October 2026 · Updated 19 October 2026

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Short answer

Both clocks start the day you close on the sale of your investment property. You have 45 calendar days to identify replacement property in writing and 180 calendar days to close on it, but the 180-day window ends sooner if your tax return for the year of the sale comes due first, unless you extend that return. Weekends and holidays don't move either deadline. Only federal disaster relief, or the combat-zone rules for service members, can.

When the clock starts

Since 2018, only real property held for business or investment qualifies for a 1031 exchange. Day zero is the day you transfer the property you're selling, which in practice is the closing. If one exchange includes more than one sale, the earliest transfer starts both clocks. The two periods run at the same time: the 45-day identification period sits inside the 180-day exchange period, not before it. Each one ends at midnight on its last day.

The setup has to happen before that first closing. The qualified intermediary needs a signed exchange agreement, and your sale contract has to be assigned to the intermediary, with the buyer notified in writing, on or before the day the property transfers. If the sale proceeds land in your account, the exchange fails, even if you buy another property later.

What you have to do within 45 days

You identify the replacement property in a written document that you sign, and you have to send it before midnight on day 45. It goes to the intermediary, to the seller of the replacement property, or to another party to the exchange who isn't you or a disqualified person. Telling your real estate agent, attorney or accountant doesn't count. The description has to be specific: a street address, a legal description or a distinguishable name for the property.

There are three ways to identify property:

Up to three properties of any value. Most investors use this one.
Any number of properties, as long as their combined value doesn't exceed 200% of the value of what you sold.
Any number of properties of any value, but then you have to actually buy at least 95% of the total value you listed.

If your list breaks the first two rules and you don't close on 95% of it, the IRS treats you as having identified nothing. Property you close on within the 45 days counts as identified automatically. You can revoke or change an identification in writing until day 45 ends. After that, the list is locked.

What you have to do within 180 days

You must close on property from your list by the earlier of day 180 or the due date of your tax return for the year of the sale, including extensions. To defer all of the gain, reinvest all of the net proceeds and buy property of equal or greater value. Cash left with the intermediary, or a drop in mortgage debt that you don't make up with new debt or your own cash, is taxable "boot." You report the exchange on Form 8824 with the return for the year of the sale.

The return due date is where fall sales get caught. A calendar-year individual's 2026 return is due April 15, 2027. Any sale that closes on or after October 18, 2026 has a day 180 later than April 15, so the exchange period ends on April 15 unless you file an extension (Form 4868) by then. The extension gives you back the full 180 days. For a calendar-year partnership or S corporation, the return is due March 15, 2027, so the same problem starts with sales that close on or after September 17, 2026, and the fix is Form 7004.

Can the deadlines be extended?

Not for ordinary reasons. A closing that slips past a weekend, a lender that runs late or a seller who backs out doesn't buy you a single extra day.

The exception is disaster relief under Revenue Procedure 2018-58. When the IRS announces relief for a federally declared disaster, 45-day and 180-day deadlines that fall on or after the disaster date can be postponed by 120 days or to the end of the IRS relief period, whichever is later. You must have sold the relinquished property on or before the disaster date. Relief usually applies to taxpayers in the disaster area, and in some cases to others who can't meet a deadline because of the disaster. The postponement also can't run past the due date of your return (including extensions) or past one year, so it won't rescue a fall sale whose return wasn't extended. Read the IRS relief notice for your area before you count on it.

Service members in a combat zone get a separate postponement under the combat-zone rules.

The qualified intermediary

The intermediary's job is to keep you from receiving the money. If you have the sale proceeds, or even the right to take them, the exchange fails and the gain is taxable. A qualified intermediary holds the funds under a written agreement that bars you from receiving, pledging or borrowing against them until the exchange ends.

Not everyone can serve. Anyone who acted as your employee, attorney, accountant, investment banker or broker, or real estate agent or broker during the two years before the sale is a disqualified person, and so are certain related parties. That means your CPA can't hold your exchange funds, and neither can the agent who sold your building. Routine title, escrow and banking services don't disqualify someone, and neither does earlier work on your 1031 exchanges.

The IRS doesn't license or regulate intermediaries. Before you sign, ask how your money will be held: a segregated or qualified escrow account, a fidelity bond, insurance.

How New Jersey treats a 1031 exchange

New Jersey follows the federal result. Its gross income tax computes gains using the federal method and basis, and the state's own closing forms treat a 1031 exchange as exempt from the nonresident estimated payment. Gain deferred under Section 1031 isn't taxed in New Jersey until a later taxable sale. Boot that's taxable federally is taxable in New Jersey too.

The closing paperwork matters for nonresidents. A nonresident who sells New Jersey real estate normally has to make an estimated income tax payment at closing (N.J.S.A. 54A:8-8). Form GIT/REP-3 lets a seller in a 1031 exchange claim an exemption by showing the value of the like-kind property received. The seller also acknowledges that if the exchange fails or only partly qualifies, they'll file a New Jersey return for the year of the sale and report the gain. If the exchange falls apart, the intermediary has to pay 2% of the full sale price.

A 1031 exchange also leaves two things untouched. It doesn't remove the realty transfer fee on the sale. And it doesn't take a resident out of New Jersey's reach: if you're still a New Jersey resident when you later sell the replacement property in a taxable sale, wherever that property is, New Jersey taxes the deferred gain then, with a credit for tax you pay to the state where the property sits.

An example, with made-up numbers: a fall sale in Jersey City.

Maria, a New Jersey resident, sells a two-family rental in Jersey City for $1,150,000, closing on Friday, November 6, 2026. She bought it for $700,000 and has taken $180,000 of depreciation, so her adjusted basis is $520,000 and her gain is $630,000 before selling costs.

Milestone	Date
Day 0: sale closes	Friday, November 6, 2026
Day 45: written identification due	Monday, December 21, 2026
2026 individual return due	Thursday, April 15, 2027
Day 180	Wednesday, May 5, 2027

By December 21 she sends her intermediary a signed list of three addresses: a four-family in Bayonne, a mixed-use building in Hackensack and a small office building in Morristown. Because her sale closed after October 17, her exchange period ends on April 15, 2027, not May 5, unless she extends. Her CPA files Form 4868 by April 15, which keeps the window open until May 5. She closes on the Hackensack building on May 3 for $1,300,000, using all of the exchange funds plus a new mortgage, and the exchange holds.

Without the extension, a May 3 closing would be too late. The exchange would fail and the $630,000 gain would be taxed like a regular sale. Using the top federal rates (25% on the $180,000 of depreciation, 20% on the other $450,000, plus the 3.8% net investment income tax) and, as a simplification, a flat 8.97% New Jersey rate on the whole gain, that's roughly $215,000. If her total income for the year passed $1 million, part of the gain would hit New Jersey's 10.75% top rate and the bill would be higher.

Want this run against your own numbers?

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Sources

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