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1031 Exchange Timeline & Like-Kind Examples
January 12, 2022 · By The Multifamily Group
A 1031 exchange lets real estate investors defer capital gains taxes when selling one investment property and reinvesting the proceeds into a like-kind replacement. The IRS imposes strict timelines that cannot be extended.
The Two Critical Deadlines
- 45 days: From the sale of the relinquished property, the investor must formally identify potential replacement properties.
- 180 days: The replacement property must close within 180 days of the relinquished property sale (or the tax-filing deadline if earlier).
What qualifies as like-kind?
In real estate, "like-kind" is broadly interpreted. A multifamily apartment can be exchanged for raw land, a strip center, or a single-tenant net-lease property — as long as both are held for investment or business purposes. Primary residences do not qualify.
Common 1031 Pitfalls
- Taking constructive receipt of the proceeds
- Identifying more than three properties without meeting the 200% or 95% rules
- Closing the replacement after the 180-day window
TMG has guided dozens of Texas multifamily owners through successful 1031 exchanges. Contact us to discuss your situation.