The most common exchange structure is the delayed “forward” exchange in which the Relinquished Property is sold, the proceeds (Exchange Funds) are delivered to the Qualified Intermediary, and are subsequently used to acquire Replacement Property from a third party seller. Two critical requirements in a delayed exchange are that the Replacement Property must be properly identified within the Identification Period and acquired before the end of the Exchange Period. IRC §1031(a)(3); Treas. Regs. §1.1031(k)-1(b)-(e).
There are two key deadlines that the Exchanger must meet to have a valid exchange:
Replacement Property must be identified within the Identification Period by at least one of the following methods:
Requirements for a Proper Identification Notice:
Exchangers have flexibility to identify multiple and alternate Replacement Properties.
Estimating the 1031 Tax Deferral on the Sale of Investment Property