What are the 1031 exchange deadlines when you sell an apartment building?
You have 45 days from the day you transfer the building you sell to identify replacement property in writing, and you must receive the replacement by the earlier of 180 days or the due date, with extensions, of your tax return for the year of the sale. Neither deadline moves for weekends, and the return due date can cut the 180 days short for sales late in the year.
What a 1031 exchange does
Section 1031 lets you defer the gain when you trade business or investment real estate for other business or investment real estate. Since 2018 it applies only to real property: the IRS says section 1031 now applies only to exchanges of real property and not to personal or intangible property, and that real property held primarily for sale still does not qualify (IRS, Like-kind exchanges, real estate tax tips). An apartment building held for rent is the classic case.
Most owners do a deferred exchange: sell the old building, have a qualified intermediary hold the money, then buy the new one. The regulations require that the intermediary is not you or a disqualified person and signs a written exchange agreement that limits your right to the money (26 CFR 1.1031(k)-1-1)).
The timeline, day by day
| When | What must happen | Rule |
|---|---|---|
| Before closing on the sale | Sign an exchange agreement with a qualified intermediary; the sale proceeds go to the intermediary, not to you | 1.1031(k)-1(g)(4) |
| Day 0 | You transfer the building you are selling; both clocks start | 1.1031(k)-1(b)(2) |
| By midnight of day 45 | Identify replacement property in a written document you sign, sent to the seller of the replacement or another party to the exchange who is not disqualified | 1.1031(k)-1(b)(2)(i) and (c)(2) |
| Up to day 45 | You may revoke an identification in a signed writing sent to the same person | 1.1031(k)-1(c)(6) |
| By the earlier of day 180 or your return due date with extensions | Receive the replacement property | 1.1031(k)-1(b)(2)(ii) |
| With the return for the year of the sale | Report the exchange on Form 8824 | IRS Form 8824 instructions |
The Instructions for Form 8824 say the description must identify the property in a clear and recognizable way; for real property, a legal description, street address or distinguishable name.
The return due date catch
The 180 day period ends early if your tax return for the year of the sale is due first. For a sale in the fall, that happens easily.
Example a made-up owner sells a 16 unit building on October 20, 2026. Day 45 is December 4, 2026. Day 180 is April 18, 2027. But an individual's 2026 return is due April 15, 2027, three days earlier, so unless the owner files an extension, the exchange must be finished by April 15. Filing the extension restores the full 180 days.
If the building is owned by a multi-member LLC that files a partnership return, the return that matters is generally the partnership's. The Instructions for Form 1065 say a calendar-year partnership's return is due March 15, which for the same sale would end the exchange period on March 15, 2027, unless the partnership files Form 7004 to extend. Confirm with your tax preparer which return controls in your case.
How many buildings you can name
The regulation limits identification to one of three tests, measured at the end of day 45:
- Three-property rule: any three properties, whatever their value.
- Two hundred percent rule: any number of properties, as long as their total fair market value is not more than 200% of the value of what you sold.
- Ninety-five percent rule: if you name more than either test allows, the identification still works only if you actually receive at least 95% of the total value of everything you named.
Most small owners name three: the target building and two backups.
Mistakes that make part of the gain taxable
- Touching the money. The regulation says gain may be recognized if you actually or constructively receive money before you receive the replacement property, and money credited to your account or set apart for you counts as received.
- Buying down. The Form 8824 instructions say gain is recognized to the extent of other property and money received, and debt the buyer takes over from you counts in that math.
- Selling to or buying from a relative. If you or the related party disposes of the property within 2 years after the last transfer, the deferred gain generally becomes taxable that year, with exceptions such as death.
- Missing day 45 by a day. The periods end at midnight on the 45th and 180th day; there is no business-day rollover in the regulation.
Example a made-up owner sells for $2,000,000 and buys a replacement for $1,850,000, with no debt on either side, and takes the $150,000 difference in cash. Up to $150,000 of the gain is recognized that year; the rest stays deferred.
Books on both sides of an exchange
In DoorKeeping each property, owned by its own LLC, has its own books, so the building you sell keeps a closed set of books with its purchase records, improvements and depreciation, and the replacement starts a fresh ledger and bank account. You can ask your AI app for the old property's final profit and loss and the documents your tax preparer needs for Form 8824. DoorKeeping does not act as an intermediary, hold sale proceeds or give tax advice.
Sources
- 26 CFR 1.1031(k)-1, Treatment of deferred exchanges (Cornell LII), read Oct 30, 2026
- IRS, Instructions for Form 8824, read Oct 30, 2026
- IRS, Like-kind exchanges: real estate tax tips, read Oct 30, 2026
- IRS, Instructions for Form 1065 (2025), read Oct 30, 2026
Questions
- Does the 45 day deadline move if it falls on a weekend?
- The regulation says the identification period ends at midnight on the 45th day after the transfer, and it has no weekend rollover, so plan to identify early.
- Can I exchange an apartment building for a different kind of real estate?
- Generally yes, if both are real property held for business or investment. Since 2018, section 1031 covers only real property, and property held primarily for sale does not qualify.
- What form reports a 1031 exchange?
- Form 8824, filed with the return for the year you transferred the property you gave up.
- Why would my exchange deadline be earlier than 180 days?
- The exchange period ends on the earlier of day 180 or the due date, with extensions, of the return for the year of the sale. Extending the return can restore the full 180 days.