My identified replacement property fell through after day 45. What can I do?

Read the notice before you read the market

The instinct to go find another building is the wrong one, and acting on it wastes days you do not have. From day 46 the only property you can acquire with exchange funds is property named in the notice that was in force at midnight on day 45.

That is not a matter of degree. First American Exchange calls the timelines and identification requirements the two areas of a 1031 that are “black and white”, and property that was never named is treated as not like-kind under Reg. §1.1031(k)-1(b)(1)(i), whatever the reason your deal collapsed.

So the first call is to your intermediary, to get the notice as it stood, and the second is to count the days you have left. 1031Property describes the same sequence for a failure on day 62: check the list first, then talk to the intermediary the same day.

A dead contract does not knock the property off your list

An identification is a description of a property, not a description of a deal, and the regulation never asked whether you had it under contract. A seller who walks on day 50 and comes back on day 70 is still selling identified property.

This matters more than it sounds. A collapsed financing contingency, a failed inspection or a price dispute can often be renegotiated inside the exchange period, and the second version of the transaction needs no new paperwork with the IRS.

What you cannot do is substitute the neighbouring parcel or the seller's other building. Those are different properties, and buying one is a taxable use of the proceeds.

Closing a smaller piece of a named property is allowed; closing a different character of asset is not

If a survivor on your list is too big for the money left, or the seller will only part with some of it, the receipt rule still has room. What you take must be “substantially the same property as identified” (Reg. §1.1031(k)-1(d)(1)(ii)).

The regulation's Example 4 accepted a purchase of 1.5 of two identified unimproved acres, $187,500 of a $250,000 parcel, because the portion did not differ in basic nature or character from the whole. Its Example 3 rejected a purchase of the barn and the land beneath it out of a barn-plus-acreage description at exactly the same fraction of value.

Whatever is not spent comes back as boot and is taxed to the extent of your gain. That arithmetic, and the Form 8824 lines it lands on, are on can my exchange partly succeed.

The name that can still close on short notice is usually a trust interest

A conventional purchase is a negotiation with a counterparty who can leave. A Delaware Statutory Trust offering is different in one respect that matters at day 62: the sponsor already owns the building, the debt is already in place and the offering documents already exist, so subscribing is paperwork rather than a transaction (1031Property).

1031 Crowdfunding puts the practical figure at three to five business days from subscription to closing, and Realized describes the same use, a trust bought inside the exchange period to preserve deferral after a deal fails. Interests are securities sold only to accredited investors, and each trust carries its own risks, fees and illiquidity.

None of that helps unless the trust was on the notice by day 45. If yours is, how quickly a DST can close and the DST guide cover what happens next; if it is not, the planning point for next time is using DSTs as backup properties.

If nothing on the list can close, the money is locked until the exchange period ends

A failed deal on day 62 is not one of the events that frees your funds. The exchange agreement must deny you the benefits of the money until every identified property has been delivered, until a written contingency closes out the rest, or until the exchange period expires (Reg. §1.1031(k)-1(g)(6)).

The contingency route is narrow. It has to be material and substantial, relate to the exchange, be provided for in writing, arise after day 45 and lie beyond your control. The regulation's own illustration is a zoning board that decides on January 5 it will not rezone any of the three identified properties, at which point the escrow pays out.

When the exchange fails, the deferral is lost outright rather than reduced, and the whole gain is reported. Which year it lands in, and which forms carry it, are set out on when the QI releases my money and when the tax is due. Have your CPA or attorney confirm the treatment before anything is signed with a seller or with your intermediary.

A decision tree by day count

Days remaining decide which option is realistic, not which is preferable. Work backwards from day 180, or from your return due date for the year of the sale if that comes first, and subtract the time a lender and a title company actually need.

• Day 46 to 90: try the survivor on your list first, and put the failed deal back together in parallel. Both routes still have room for a lender.
• Day 91 to 140: a financed purchase of a second-choice building is getting tight; ask each named seller for a written timeline before committing.
• Day 141 to 170: an all-cash or subscription-based closing is usually the only one that fits. A named trust interest is the one that does not depend on a counterparty.
• Day 171 to 180: expect to fail, and switch the conversation to your CPA, to estimated tax and to whether the payout falls in this tax year or the next.
• At every point: no new property can be added, and asking for the money early does not make it available (can I touch my exchange funds).