The IRS requires that the replacement property must be acquired within 180 days from the completion of the sale of the relinquished property. If this requirement is not met, the 1031 exchange may not be allowed and captial gain tax may result.

It is important to keep in mind that the 180 days completion period is not in addition to the 45 days identification period. It overlaps and includes the 45 days identification period and normally cannot be extended. The 180 days completion period is based on the calendar day and not business day. Every calendar day is counted as one day. If the 180th day falls on a weekend or holiday, it is strongly suggested that the closing of all of the replacement properties are to occur before then. No additional time is granted.

It should be noted that the transfer of fund to the closing agent may take up to 3 or 4 working days.  It should also be noted that even when the closing agent receives all necessary fund and documents, recording may not take place on the same day.  As such, the exchanger should plan to close escrow on the replacement properties with sufficient time for the fund to be received by the closing agent and for the recording to take place - prior to the expiration of the 180 days. To avoid the 1031 exchange to be disqualified, we suggest that the exchangers complete the acquisition of all of the replacement properties with plenty of time before the expiration of the 180 days completion period.

*** Warning: If the tax return due date expires before the expiration of the 180 days completion period, an extension to file the tax return must be filed to maintain the 180 days period. Not filing the extention to file the tax return will cut short the 180 days completion period.