In short
Why the intermediary agreement, contract language and replacement plan must exist before a spring listing: the 45-day clock starts at closing and the IRS cannot extend it.
A spring listing that closes in early summer gives you 45 days to identify replacement property and 180 days to close on it, and both clocks start the day the deed transfers, not the day you decide to exchange. The intermediary agreement, the contract language and a replacement plan all have to exist before closing, because once proceeds reach you the exchange is over. The IRS confirmed in a November 2025 letter that it has no authority to extend the 180 days outside a federally declared disaster. Here is what to put in place in March.
The clocks start at closing and nothing restarts them
Section 1031(a)(3) treats property as not like-kind if it is not identified within 45 days after you transfer the relinquished property, or if it is received after the earlier of 180 days or the due date of your return, including extensions. Reg. section 1.1031(k)-1(b)(2) counts both periods from the transfer date in calendar days.
Hypothetical: you list in March, go under contract in April, and close June 1. Day 45 is July 16 and day 180 is November 28. If closing slips to June 30, the dates slide to August 14 and December 27. Neither weekends nor holidays move a deadline; see when the 45-day clock starts and 45-day deadlines on weekends and holidays.
In Information Letter 2025-0008, dated November 24, 2025, the IRS Office of Chief Counsel answered a taxpayer who had asked for a private letter ruling extending the 180-day period. The deadline “is set by statute,” and aside from a federally declared disaster, significant fire, or terroristic or military action under section 7508A, “the IRS does not have the authority to extend the 180-day replacement period.” Plan as if no extension exists.
Engage the intermediary before you accept an offer
The safe harbor in Reg. section 1.1031(k)-1(g)(4) requires a qualified intermediary who is not you or a disqualified person, a written exchange agreement, and an intermediary who acquires the relinquished property from you and transfers the replacement property to you. Under paragraph (g)(6), that agreement must expressly limit your right to receive, pledge, borrow or otherwise obtain the benefits of the money until the exchange period ends. An intermediary cannot be added after the buyer has wired funds to you, and a title company that simply holds your money is not an intermediary unless the agreement says so.
Paragraph (k) disqualifies anyone who acted as your employee, attorney, accountant, investment banker or broker, or real estate agent or broker within the two years ending on the transfer date, apart from exchange services and routine financial, title insurance, escrow or trust services. Vet candidates in March; the page on what a qualified intermediary needs to open an exchange lists the documents, and how to choose a qualified intermediary covers fund safety.
Put the exchange language in the listing and the contract
Your purchase agreement should state that the sale is part of a section 1031 exchange, that the buyer will cooperate at no cost, and that you may assign your rights to the intermediary. That assignment, with notice to the buyer, is how the intermediary is treated as acquiring and transferring the property. Read the exchange cooperation clause for sample language and the planned glossary entry on the exchange cooperation clause.
Check title and entity now as well. The taxpayer that sells must be the taxpayer that buys; see the same-taxpayer rule before you move the property into or out of an LLC or trust in the months before listing.
Build the replacement plan before you have proceeds
The identification rules in Reg. section 1.1031(k)-1(c)(4) let you name up to three properties of any value, or any number whose total fair market value is no more than 200 percent of what you sold, or more than that if you close on at least 95 percent of the value identified. Forty-five days is not long to find, underwrite and contract for property, so most sellers start the search while the listing is active. You may go under contract on a replacement before your sale closes; see contracting for replacement property before the sale closes.
Many sellers name a Delaware statutory trust interest as one of their three identifications so the exchange does not fail if a direct purchase falls through. The DST backup strategy guide explains how that works, and the traditional DST page describes the product. If you expect to need some cash from the sale, read about cash out DSTs before you fix the identification.
Check state withholding before the closing date is set
Many states withhold at closing on nonresident sellers and require an exemption affidavit for exchanges filed days or weeks before closing. A missed affidavit means withheld cash that the intermediary never receives, which is boot. Find your state on the state 1031 pages and read state withholding at closing.
What to do now
- Sign an exchange agreement with a qualified intermediary before you accept an offer, and confirm the intermediary is not a disqualified person.
- Add the cooperation and assignment clause to your listing package and purchase agreement.
- Start the replacement search now and plan at least one backup identification.
- Confirm your state’s withholding form and filing deadline, then start the conversation so the replacement side is ready when the sign goes up.
We broker 1031 exchanges, are licensed in every state under a regulated broker-dealer framework, and have placed over a billion dollars with vetted national DST sponsors across more than twenty years.
