The short answer
Relinquished property is the real property you transfer in a like-kind exchange, the property you give up, as defined in Reg. section 1.1031(k)-1(a). It must be held for productive use in a trade or business or for investment, and its transfer starts both the 45-day identification period and the exchange period under section 1031(a)(3). When several relinquished properties are sold in one exchange, both clocks run from the earliest transfer.
At a glance
| Definition | The business or investment real property you transfer in the exchange |
|---|---|
| Clock trigger | The date the property is disposed of, generally the closing |
| Several properties | Deadlines run from the earliest transfer in the exchange |
| 200% rule base | Combined value of all relinquished properties on their transfer dates |
The term is defined in the deferred exchange regulations and borrowed from the statute
Section 1031(a)(3) measures its deadlines from the date "the taxpayer transfers the property relinquished in the exchange." Reg. section 1.1031(k)-1(a) turns that phrase into a defined term: the property held for productive use in a trade or business or for investment that you transfer under an exchange agreement.
The use test is the one in held for productive use or investment, and the property must be real property. The property you receive is the replacement property. In a reverse exchange, Rev. Proc. 2000-37 also lets an accommodation titleholder hold the relinquished property for up to 180 days while you find a buyer.
Under Reg. section 1.1031(k)-1(b)(2)(iv), property is transferred when it is disposed of within the meaning of section 1001(a). For most sales that is the closing, not the day you sign the contract; see when the 45-day clock starts.
Worked example: two rentals sold six weeks apart share one set of deadlines
Reg. section 1.1031(k)-1(b)(2)(iii) says that when one exchange includes several relinquished properties transferred on different dates, the identification period and exchange period are set by the earliest transfer.
Hypothetical: you sell a duplex on March 2, 2026 and a rental house on April 15, 2026 as one exchange. Day 45 ends at midnight on April 16, 2026 and day 180 at midnight on August 29, 2026, both counted from March 2. The house's proceeds get only about four and a half months to be reinvested.
Under the 200% rule, the ceiling for identifying more than three properties is twice the combined value of both relinquished properties on their transfer dates. If timing is tight, two separate exchanges may suit better; see one property into several or several into one. Confirm the dates with your intermediary and CPA.
Where it bites: the sale paperwork, recapture and closing withholding
The intermediary must be treated as transferring the relinquished property. Reg. section 1.1031(k)-1(g)(4)(v) allows this by assigning your sale contract to it, with written notice to all parties on or before closing. In the regulation's Example 5 the seller skipped that step, and the transfer was a sale.
Parts of the relinquished property can still produce tax. Real property status for the exchange does not stop section 1245 recapture on components depreciated as personal property, and furniture or equipment sold with the building is not exchanged at all.
Some states withhold income tax at the closing of a nonresident's sale unless an exchange exemption form is filed; see states that withhold at closing.
Related questions
Does the clock start when I sign the sale contract or when the sale closes?
When the property is disposed of for tax purposes, which for a typical sale is the closing date, not the contract date.
Can I sell two or more properties in one exchange?
Yes. Reg. section 1.1031(k)-1(b)(2)(iii) allows it, but both deadlines run from the first transfer, so later sales get less time.
Do I have to sell the relinquished property before buying the replacement?
In a delayed exchange, yes. Buying first requires a reverse exchange through an exchange accommodation titleholder under Rev. Proc. 2000-37.
Sources
Checked against these publications on September 30, 2026. Rules and figures change; confirm the current version with your CPA or attorney before you act. This page is general information, not tax or legal advice.