The gain becomes taxable
If you miss the 45-day identification or 180-day closing deadline, or take receipt of the funds, the exchange fails and the full gain — recapture plus capital gains — becomes taxable.
Straddling tax years
If the exchange fails after year-end but within the 180-day window, installment-sale timing rules may let you report the gain in the following tax year rather than the year of sale.
Avoiding failure
Line up replacement candidates before you sell, keep the QI involved, and watch the calendar — the deadlines don't flex for weekends or holidays.
Frequently asked questions
What if I miss the 45-day deadline?
The exchange fails and your gain becomes taxable.
Can I defer the tax if my exchange fails?
Sometimes — if it straddles two tax years, installment-sale rules may push recognition to the next year.
Sources
Educational information and estimates only. Not tax advice. Tax rules change and vary by situation; consult a qualified tax professional before acting.