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Key Rules Around 1031 Exchanges  

As with any tax-based strategy, the requirements are complex, so it is important for investors to complete the 1031 exchange with experienced advisors (learn more about Origin Exchange’s process here). There are a few key rules to understand before selling investment property. 

Qualified intermediary: An investor can never take constructive receipt of proceeds from the sale of a relinquished property. Therefore, an escrow agent, known as a qualified intermediary, or QI, must be set up beforehand to take possession of proceeds at closing. Because the QI is an important part of the process, we strongly recommend working with an experienced QI who has facilitated many 1031 transactions.  

Time frame: Upon closing of the relinquished property, the clock begins ticking for the 1031 investor.  

• 45 days: The investor must identify a replacement property within 45 days of closing. 
• 180 days: The investor must close on the replacement property within 180 days of closing on the relinquished property.