A 1031 exchange runs on two fixed deadlines: 45 days to identify replacement property, 180 days to close on it. The failures that sink an exchange - proceeds touching the client's hands, an identification that misses the window, a mis-stated basis - are failures of timing and coordination, not of tax law. A phase-based checklist keeps the documents, deadlines, and hand-offs visible to everyone on the deal.
Two deadlines that run the whole exchange
A 1031 exchange runs on two fixed deadlines. From the day the client sells, the clock allows 45 days to identify replacement property and 180 days to close on it. Both are counted in calendar days, and neither moves for a weekend, a holiday, or a natural disaster.
That is why the real work starts before the sale, not after it. This checklist breaks the exchange into five phases, from a planning call 30 days out to the Form 8824 that reports it at tax time. Each task carries a due date, the person who owns it, and the mistake that most often derails it at that step.
Print it, fill in the real dates for each client, and hand it to everyone on the deal at the start: the qualified intermediary (QI) who holds the proceeds, the realtor, the CPA, and the attorney.
Phase 1: Pre-Sale Planning (Day -30 to Day 0)
Task | Due | Owner | Action | Common Failure |
|---|---|---|---|---|
1.1 | Day -30 | Advisor | Conduct pre-sale planning call: confirm investment intent, verify holding period, verify tax identity (individual, LLC, S-corp), run preliminary tax projection, discuss replacement property criteria, check for related-party complications (IRC 1031(f)), document findings in summary email | Advisor skips entity/tax-identity check; mismatch surfaces at closing |
1.2 | Day -20 to -15 | Advisor / Client | Provide client with 2-3 QI options (experience, fees, references); confirm client has selected and engaged QI; confirm QI has executed exchange agreement; provide QI with contact info, expected sale date, and expected proceeds | QI engaged too late; title company does not have wiring instructions |
1.3 | Day -15 | Advisor | Assemble deal team: confirm selling realtor understands 1031 and will not wire proceeds to client; confirm title company has QI wiring instructions; alert CPA that Form 8824 will be needed; brief client attorney if applicable | Realtor unaware of 1031; proceeds wired to client (constructive receipt) |
1.4 | Day -15 | Advisor / CPA | Calculate adjusted basis, depreciation recapture, realized gain; prepare two scenarios (exchange vs. taxable sale); show effective tax rate; share with CPA for review | Basis miscalculated; recapture underestimated |
1.5 | Day -10 | Advisor | Create timeline document: expected closing date (Day 0), Day 45 identification deadline, Day 180 acquisition deadline, internal milestones (Day 20 screening, Day 35 contract, Day 140 closing ready); distribute to client, QI, realtor, CPA, attorney | No written timeline; team members unaware of deadlines |
Documents to Collect (Phase 1)
Phase 2: Exchange Opens (Day 1-7)
Task | Due | Owner | Action | Common Failure |
|---|---|---|---|---|
2.1 | Day 1-3 | Advisor / QI | Contact QI within 24 hours of closing; confirm proceeds received; verify net amount matches estimate; confirm QI has updated contact info and identification deadline | QI does not receive proceeds; wire sent to wrong account |
2.2 | Day 1-3 | Advisor | Verify client did not receive any check or wire from the sale; if client received a check, confirm it is a collateral refund, not sale proceeds | Client accidentally receives proceeds (constructive receipt) |
2.3 | Day 3-5 | Advisor / CPA | Work with CPA to verify final adjusted basis; confirm depreciation adjustments; note closing date and proceeds for Form 8824 | Basis not finalized; errors carry into replacement property |
2.4 | Day 5-7 | Advisor / Realtor | Share replacement property criteria with buying realtor; request 5-10 candidates by Day 15 with details (type, price, income, condition, valuation) | Search starts too late; insufficient candidates by Day 20 |
Documents to Collect (Phase 2)
Phase 3: Identification Window (Day 8-45)
Task | Due | Owner | Action | Common Failure |
|---|---|---|---|---|
3.1 | Day 8-20 | Advisor / Realtor | Review 5-10 candidates; verify each is like-kind real property for investment; eliminate non-qualifying or red-flag properties; narrow to 3-5 finalists; request appraisals or broker opinions of value | Client procrastinates; arrives at Day 40 with no vetted candidates |
3.2 | Day 20-35 | Advisor / Realtor | Schedule inspections (structural, environmental, mechanical); review tenant leases and rent rolls; verify taxes, insurance, HOA; run preliminary financial analysis; discuss alignment with client goals | Inspection reveals problems too late to pivot |
3.3 | Day 30-40 | Advisor / Realtor / Lender | Identify most likely property to close on time; request market analysis for top candidates; obtain financing pre-approval; brief replacement title company on 1031 and QI coordination | Lender not engaged; financing delays blow Day 180 |
3.4 | Day 35-40 | Advisor | Draft identification letter: confirm QI template or format; list identified properties with legal description, address, county/state; include only properties client is serious about; review with client | Vague property description; letter delivered to wrong party |
3.5 | Day 40-45 | Client / Advisor | Obtain client signature on identification letter; email to QI with tracking confirmation; confirm QI receipt in writing; forward copy to CPA and deal team | Deadline missed; identification not delivered to QI |
Documents to Collect (Phase 3)
Phase 4: Acquisition Period (Day 46-180)
Task | Due | Owner | Action | Common Failure |
|---|---|---|---|---|
4.1 | Day 46-70 | Realtor / Client | Negotiate purchase and sale agreement; confirm price, closing date, contingencies; set closing date at least 20 days before Day 180; share signed contract with QI and closing attorney | Closing date set too close to Day 180; no buffer for delays |
4.2 | Day 50-100 | Advisor / Lender | Brief lender on 1031 and Day 180 deadline; provide financials, tax returns, replacement appraisal; confirm lender will accept QI wire for down payment; request loan commitment by Day 120 | Lender unfamiliar with 1031; underwriting drags past deadline |
4.3 | Day 60-130 | Advisor / Client | Complete property inspection; verify appraisal at or above purchase price; confirm clear title insurance commitment; review environmental, zoning, and use compliance | Appraisal comes in low; title defect discovered late |
4.4 | Day 120-170 | Advisor / Title Co. | Provide QI wiring instructions to closing attorney/title company; request preliminary closing statement by Day 150; confirm exact closing date and time; if Day 180 is weekend/holiday, close by Day 178 | QI wiring instructions missing at closing |
4.5 | Day 170-180 | Client / Advisor | Final walkthrough; confirm repairs complete; verify QI is ready to wire; confirm lender final approval and documents; ensure closing attorney has correct purchase price, debt, and basis info | Last-minute issue with no buffer time |
Documents to Collect (Phase 4)
Phase 5: Post-Close (Day 181+)
Task | Due | Owner | Action | Common Failure |
|---|---|---|---|---|
5.1 | Day 181-190 | Advisor / Title Co. | Obtain recorded deed; confirm title insurance policy issuance; verify client has keys, rental income, and property control | Deed not recorded; title policy delayed |
5.2 | Day 185-210 | Advisor | Collect final closing statements for both properties; gather deed, survey, environmental reports, loan documents; compile closing packet and send to CPA | CPA receives incomplete documents; Form 8824 delayed |
5.3 | Day 200-210 | Advisor / CPA | Provide basis summary: adjusted basis of relinquished, sale proceeds, boot received, purchase price and financing of replacement, adjusted basis of replacement; request preliminary Form 8824 draft; discuss recapture and state tax | Basis carryover miscalculated; depreciation schedule wrong |
5.4 | Day 210-365 | Advisor / Client | Review replacement property performance; update investment allocation and check for concentration risk; discuss long-term hold vs. future exchange; confirm depreciation schedules on tax return | No post-close review; basis errors go undetected |
5.5 | Tax deadline | CPA / Advisor | Review completed Form 8824; confirm taxpayer info, property descriptions, and basis calculations; ensure filing with annual return; keep copy for file | Form 8824 not filed; exchange not reported |
Documents to Collect (Phase 5)
Master Timeline Summary
Phase | Key Milestone | Deadline | Owner |
|---|---|---|---|
Pre-Sale | Planning call | Day -30 | Advisor |
Pre-Sale | QI engaged | Day -20 | Client / Advisor |
Pre-Sale | Team assembled | Day -15 | Advisor |
Pre-Sale | Tax projection complete | Day -15 | Advisor / CPA |
Pre-Sale | Timeline document distributed | Day -10 | Advisor |
Exchange Opens | QI confirms proceeds | Day 3 | QI |
Exchange Opens | No proceeds to client verified | Day 3 | Advisor |
Exchange Opens | Property search begins | Day 7 | Realtor |
Identification | Candidates screened | Day 20 | Advisor / Realtor |
Identification | Due diligence complete | Day 35 | Advisor / Realtor |
Identification | Identification letter drafted | Day 40 | Advisor |
Identification | Identification submitted and confirmed | Day 45 | Client / Advisor / QI |
Acquisition | Purchase contract signed | Day 70 | Realtor / Client |
Acquisition | Financing approved | Day 120 | Lender |
Acquisition | Final walkthrough | Day 175 | Client |
Acquisition | Replacement property closes | Day 180 | Title Co. |
Post-Close | Deed recorded | Day 185 | Title Co. |
Post-Close | Closing documents to CPA | Day 210 | Advisor |
Post-Close | Form 8824 filed | Tax deadline | CPA |
Manage by checklist, not by hope. Print this page, fill in the client's specific dates, and give it to everyone on the deal. The QI, the realtor, the attorney, and the CPA should each know which boxes they own and when their part is due.
Frequently asked questions
What counts as Day 1 for the 45- and 180-day periods?
Day 1 is the day the client gives up the relinquished property, normally the day title closes and the client no longer owns it. Close at 3 p.m. on a Tuesday, and that Tuesday is Day 1. Both the 45-day identification window and the 180-day acquisition period start there, counted in calendar days, not business days.
Can weekends or holidays extend the deadlines?
No. The deadlines under IRC 1031 are absolute. If Day 45 lands on a Saturday, the deadline is midnight that Saturday; if Day 180 lands on Christmas, the deadline is midnight Christmas. There are no extensions for weekends, federal holidays, or natural disasters.
What's the most common reason identifications fail?
The client procrastinates and identifies nothing by Day 45. The next most common: the client identifies property that then doesn't close by Day 180, so no like-kind property is actually acquired. Third: the client identifies several properties, but a seller turns uncooperative or one fails inspection. All three trace to the same thing - starting late, or identifying only properties without a reliable path to closing by Day 180.
What if the client's sale closes late in December?
Say the relinquished property closes on Dec. 20. Day 45 then falls on Feb. 3 and Day 180 on June 19 of the following year, which splits the exchange across two tax years. The same-taxpayer rule still holds: the person or entity that sold must be the one that buys. Some advisors avoid December closings for this reason, and when it can't be avoided, the tight point is the identification deadline in early February.
Can the advisor sign the identification letter on behalf of the client?
No. The identification letter must be signed by the client or taxpayer, or by a representative holding written power of attorney. Many QIs accept a representative's signature, but the authority has to be documented. In practice, advisors don't sign these themselves: the client signs, or an attorney signs under a power of attorney granted for this specific purpose.
What documentation should the advisor keep in their own file?
Keep the exchange agreement with the QI, the identification letter and every draft of it, the purchase and sale agreement for the replacement property and the one for the relinquished property, both closing statements, the preliminary tax projections, the timeline document and the emails coordinating it, and the CPA's completed Form 8824. Together these are the record that the exchange was managed within the rules, and they are what you reach for in an audit or dispute.