Most 1031 exchange articles tell you the same two numbers: 45 days to identify replacement property and 180 days to close. That is right as far as it goes. But if you sell a property late in the year, the second number can be shorter than 180 days, and many investors do not find out until it is too late to fix.
The trap: “the earlier of” two dates
Section 1031 says you must receive your replacement property by the earlier of two dates: 180 days after you transfer the property you are selling, or the due date of your tax return for the year of the sale, including extensions. For a sale early in the year, the 180 days comes first. For a sale in the fourth quarter, your tax return due date can arrive first.
Your 2026 dates
| Who is selling | Return due date | Sell after this date and your window shrinks |
|---|---|---|
| Individuals (and single-member LLCs reported on your personal return) | April 15, 2027 | October 17, 2026 |
| Partnerships and S corporations (including most multi-member LLCs) | March 15, 2027 | September 16, 2026 |
If you are an individual with a closing on or before Friday, October 16, you get the full 180 days with no extra step. After that, the clock gets shorter unless you extend. If the property is held in a partnership or S corporation, that date has already passed, and the entity’s own extension matters. Your CPA will tell you which return controls.
What it looks like in real dates
| Sale closes | 45-day identification deadline | Day 180 | Without an extension, you actually have until |
|---|---|---|---|
| November 16, 2026 | December 31, 2026 | May 15, 2027 | April 15, 2027 (30 days lost) |
| December 15, 2026 | January 29, 2027 | June 13, 2027 | April 15, 2027 (59 days lost) |
These examples are for an individual taxpayer. Note that the identification deadline for a November 16 sale lands on New Year’s Eve. The 45-day and 180-day periods are counted in calendar days, so weekends and holidays count, and you should not plan on an extension for a holiday.
The fix: extend your return, and do not file early
- File an extension. For an individual, that is Form 4868 by the original due date. Extending your return pushes the “due date, including extensions” to October 15, 2027, which restores the full 180 days. Partnerships and S corporations have their own extension form.
- Do not file your tax return early. If you file before the exchange closes, the exchange period can end on that filing date, even if 180 days have not passed.
- Put it on a calendar now. Tell your CPA the sale date the day you go under contract, not in March.
Identification: write down more than one property
You must identify replacement property in writing to your qualified intermediary within 45 days. The rules limit how many properties you can list. The simplest approach is the three-property rule: you can identify up to three properties regardless of price. If you want to list more, a value limit generally applies. Your qualified intermediary will explain the options.
My advice is to identify backups. If your first choice falls apart in inspection or financing, you cannot add a new property after day 45. If you are open to the Verde Valley, my Cottonwood 1031 exchange guide explains why many investors spread one sale across lower-priced rentals there.
If your replacement is a short-term rental
Three points I raise with every investor buying an STR with exchange money:
- Only real estate qualifies. Since 2018, Section 1031 applies to real property only. In a turnkey, furnished purchase, the value allocated to furniture and furnishings is personal property, not like-kind. Ask your qualified intermediary how to handle that, because exchange money used for furnishings can be taxable.
- It has to be held for investment. The IRS has a safe harbor for dwelling units in Revenue Procedure 2008-16. As summarized by exchange firms, it looks at holding the property for at least 24 months after the exchange, renting it at fair rental value for at least 14 days in each of the two 12-month periods, and keeping personal use to no more than the greater of 14 days or 10% of the days rented. Confirm the details with your CPA before you plan any personal stays.
- The depreciation math is a CPA question. How bonus depreciation and cost segregation interact with the basis you carry over from an exchange is not something to assume. Ask before you build a plan around it. My year-end timeline covers the placed-in-service side.
Your late-year 1031 checklist
- Hire your qualified intermediary before the sale closes.
- Find out which return controls your deadline, and whether you need an extension.
- Write the day 45 and day 180 dates on a calendar the day you go under contract.
- Line up your replacement search before you sell, not after.
- Identify backup properties in writing.
- Plan how furnishings and personal use will be handled if you buy an STR.
If you are selling and exchanging into Sedona or the Verde Valley, book a 15-minute call and we can map your dates before you list. I work alongside your intermediary and CPA, as I explain in my Sedona 1031 exchange guide. For the basics, see 7 things most investors miss about 1031 exchanges.
Disclaimer: William Hamburg is an Associate Broker with Realty ONE Group Mountain Desert in Sedona, Arizona. He is not a CPA, tax attorney or qualified intermediary. This article summarizes general information about Section 1031 of the Internal Revenue Code and IRS Revenue Procedure 2008-16 as of its publication date and is not tax, legal or investment advice. Exchange deadlines are strict, and how they apply depends on your individual facts and tax filing status. Confirm every date and rule with your own qualified intermediary and CPA before listing or closing on any property.