180-Day Exchange Period

The 180-day exchange period is the second hard deadline in a deferred 1031 exchange. The investor must acquire and close on the replacement property within 180 calendar days of selling the relinquished property, and this window runs concurrently with, not in addition to, the 45-day identification period. In other words, the 45 days to identify are part of the same 180 days, leaving roughly 135 days after identification to close. Like the 45-day rule, the 180-day rule allows no extensions for weekends or holidays. There is one important wrinkle: the exchange period actually ends on the earlier of 180 days or the due date (including extensions) of the investor's federal income tax return for the year the relinquished property was sold. An investor who sells late in the year must therefore file a tax-return extension to preserve the full 180 days; otherwise the deadline could be cut short. Failing to close within the period causes the exchange to fail and the gain to become taxable. The tight, fixed timeline is a primary reason investors turn to Delaware Statutory Trusts, which can typically be closed in days rather than the weeks a direct purchase requires.