You must officially close on the property within 180 days. Merely having it "under contract" or in escrow is not enough.
The IRS is incredibly rigid about this timeline. If you have a signed contract but the closing date slips to Day 181, the entire exchange fails, and you will owe the full capital gains tax.
The Two Critical Deadlines
2Both clocks start ticking the moment you close the sale of your original (relinquished) property.
| Deadline | Timeline | Requirement |
|---|---|---|
| Identification Period | 45 Days | You must submit a written list of potential properties to your QI. You do not need to have them under contract yet. |
| Exchange Period | 180 Days | You must complete the purchase (transfer of title/closing) of one or more properties from your 45-day list.f |
⚠️ The "Tax Return" Trap
There is one sneaky rule that can actually make your 180-day window shorter.
The law says you must close by the earlier of:
- 180 days after the sale of your first property.
- The due date of your tax return (including extensions) for the year the sale happened.
Example: If you sell a property in November, your 180-day window would normally end in May. However, your tax return is due April 15th. If you file your taxes on April 15th before finishing the exchange, your window closes early on that day.
- The Fix: You must file for a tax extension to push your filing date past the 180-day mark.
Key Takeaways
- No Extensions: Unlike other IRS deadlines, there are no extensions for weekends, holidays, or even natural disasters (unless there is a very rare, specific disaster relief notice issued by the IRS).
- Concurrent, Not Consecutive: You do not get 45 days + 180 days (225 total). You get 180 days total, and the first 45 are for identifying.
- The QI's Role: Your Qualified Intermediary will usually track these dates for you, but the legal responsibility to close on time rests on you.
Are you getting close to your 45-day identification deadline, or are you already looking at specific properties to buy?