Real Estate Tax Calc
How the 45-day and 180-day clocks start
Both clocks start on the same day: the date the relinquished property (the property you are selling) transfers to the buyer. In practice, this is the date of closing—when title passes and the sale proceeds wire to the qualified intermediary. Day 0 is the closing date itself; Day 1 is the first calendar day after closing.
Example: Your relinquished property closes on July 1, 2026.
45-day identification deadline: Count 45 calendar days from July 1. July has 31 days; 31 − 1 = 30 more days in July after the closing date; 45 − 30 = 15 days into August. Your identification deadline is August 15, 2026. If August 15 falls on a weekend, it extends to the next Monday.
180-day closing deadline: Count 180 calendar days from July 1. July (30 days remaining after the 1st) + August (31) + September (30) + October (31) + November (30) + December (28 days to reach 180) = December 28, 2026. Your replacement property must close by December 28, 2026.
Calendar example: July 1 sale
To make the timeline concrete, here is a full calendar example:
July 1, 2026: Relinquished property closes. Proceeds wire to QI. Day 0 begins.
August 15, 2026 (Day 45): Written identification of replacement properties must be received by the QI by midnight. The investor submits an identification notice listing three properties on August 14, with email confirmation from the QI.
August–December 2026: The investor tours identified properties, selects one, negotiates a purchase contract, obtains financing, and schedules closing.
December 1, 2026: The investor closes on the replacement property, well within the December 28 deadline. The QI wires exchange funds to the closing. The exchange is complete.
Tax season 2027: The investor's CPA files Form 8824 with the 2026 federal income tax return, reporting the completed exchange and the deferred gain.
The three identification rules
When you submit your written identification by Day 45, you must follow one of three identification rules to be valid:
The 3-Property Rule (most used): Identify up to three replacement properties, regardless of their value. The IRS does not require that you actually purchase all three—just that you identify them. This rule gives maximum flexibility: investors typically identify three properties and negotiate hard on their preferred choice, with the others as backups.
The 200% Rule: Identify any number of properties (more than three is allowed under this rule), provided the total fair market value of all identified properties does not exceed 200% of the relinquished property's FMV. For example, if the relinquished property sold for $500,000, you can identify any combination of properties whose total FMV does not exceed $1,000,000.
The 95% Rule: Identify any number of properties of any total value, but you must actually receive (close on) at least 95% of the aggregate fair market value of all identified properties. This rule is almost never used because it requires nearly perfect execution—if you identify $2,000,000 of properties and only close on $1,800,000 worth, you fail the 95% test ($1,800,000 ÷ $2,000,000 = 90%, less than 95%).
Most investors use the 3-Property Rule. It requires the least tracking and gives you three chances to complete a deal without the pressure of the 200% cap or the 95% acquisition requirement.
How to properly deliver the identification
The identification must be a written document, signed by the taxpayer (or authorized representative), that specifically describes the replacement property. "Specific" means:
For real property: the address of the property, or its legal description, or both. Simply writing "a residential rental in Phoenix" is not specific enough.
The identification can be delivered to the QI by: hand delivery, fax, overnight courier, certified mail, or email (if email, get a read receipt or other confirmation). Always save proof of delivery with the exact date and time.
The identification is irrevocable after the 45-day deadline. Before midnight of Day 45, however, you can revoke or amend the identification by submitting a new signed identification notice. Many investors submit an initial identification early in the 45-day period with their best options, then revise if better opportunities emerge before Day 45.
The "earlier of" rule and the return due date trap
The 180-day deadline is "the earlier of 180 days OR the due date of the tax return." This creates a timing trap for investors who sell late in the year.
Example: Your relinquished property closes on November 20, 2026. Counting 180 days, your deadline would be May 19, 2027. However, if your 2026 federal income tax return is due April 15, 2027 (and you do not file an extension), your replacement property must close by April 15, 2027—not May 19. Filing a tax extension to October 15, 2027 pushes the "return due date" component out to October 15—but May 19 is still earlier, so the 180-day deadline controls.
For sales in November and December, the interplay between the return due date and the 180-day period requires careful attention. If your 180-day period is shorter than you expect because the return due date is earlier, filing a timely extension (before April 15) may give you more time—but only if the 180-day period would run past the extension deadline.
What happens if you miss the 45-day or 180-day deadline?
Missing the 45-day identification deadline: The exchange fails entirely. The QI must release all exchange funds to you. The entire gain on the relinquished property is taxable in the year of sale, including all unrecaptured §1250 gain and §1231 gain. No partial deferral is available for a missed identification deadline—it is all or nothing.
Missing the 180-day closing deadline: If you identified replacement properties validly but failed to close on any of them within 180 days, the exchange fails and all proceeds are returned and taxable. If you closed on some but not all identified properties within 180 days, the exchange succeeds for the properties you did close on. The unused exchange funds returned to you are taxable boot.
Extensions are available only for taxpayers in federally declared disaster areas. The IRS has published Revenue Procedure 2007-58, which outlines the disaster-relief extension procedures, generally granting a 120-day extension to exchange periods interrupted by major disasters.
Frequently asked questions
Do weekends and holidays count in the 45-day 1031 exchange deadline?
Yes. The 45-day and 180-day deadlines are measured in calendar days—weekends and federal holidays count. The only exception is if the deadline falls on a Saturday, Sunday, or legal holiday, in which case it extends to the next business day under IRC §7503. Count every day from the closing date, including weekends and holidays.
What time of day is the 45-day identification deadline?
The identification must be received by the qualified intermediary no later than midnight at the end of the 45th day. Many QIs recommend submitting the identification by end of business on Day 45 to avoid any time-zone or delivery issues. Submitting early—by Day 40—is the safest approach.
Can you change the properties you identified in a 1031 exchange?
Generally no. Once the 45-day deadline passes, the identification is final—you cannot add, substitute, or revoke properties. However, before midnight of Day 45, you can submit a new, revised identification notice, and the most recent one controls. Revisions after the deadline are not permitted.
What happens if you can't close on the replacement property within 180 days?
If you fail to close within 180 days, the exchange fails for any unclosed property. Unused exchange funds are distributed to you and taxable in the year of the relinquished property sale. If you closed on some identified properties within 180 days, the exchange is valid for those—only the unclosed portion fails.
Educational information and estimates only. Not tax advice. Tax rules change and vary by situation; consult a qualified tax professional before acting.