If you sold an investment property and want to defer the capital gains tax, the IRS gives you a tool to do it. It is called a 1031 exchange, and it runs on one unforgiving countdown. In Part Two of my 1031 Exchange series, I break down the full 180 day exchange timeline, or as I call it, the 45 plus 135.
Watch Episode 2 here: https://youtu.be/Fmn8CWixb9I
The first 45 days
The clock starts the day you close on the property you sold, and the first 45 days are all about identification. You must identify up to three potential replacement properties and submit that identification correctly. There is a right way to do this and a wrong way, and the wrong way can sink the whole exchange. I covered that step in detail in Episode One, so if you have not watched it yet, start there first.
The next 135 days
Here is where investors get in trouble. Once those properties are identified, the work should not slow down. You have roughly 135 days left to negotiate terms, complete inspections and feasibility studies, order environmental assessments when necessary, obtain appraisals, review title, secure financing, and resolve any issues before closing.
That sounds like plenty of time. It is not. Weekends and holidays count, lenders move slower than anyone wants, and good replacement inventory in San Antonio and the surrounding Hill Country does not wait around. Too many investors coast through the middle of the timeline and then try to complete everything in the final weeks. That is when a 1031 exchange turns into unnecessary chaos, and it puts the tax benefits themselves at risk.
Treat 180 like 120
My advice to clients is simple. Build the timeline backwards from day 180 and act like it is day 120. Have your replacement shortlist forming before you close on the sale. Get your lender warmed up before day one. Keep your inspections and due diligence moving the moment identification is done.
This is a team sport
A successful exchange requires an experienced team, not just one person. You want a real estate agent who understands the 1031 process working alongside the right exchange and tax professionals from the very beginning. If you are considering an exchange, reach out to me and Carl Pikus early. We will help you create a strategy, stay ahead of the deadlines, and use this powerful tax deferral tool the way it was meant to be used.
Schedule a 1031 strategy call with JJ: https://calendly.com/treygroupcommercial/30min
JJ Gorena helps investors across San Antonio, Boerne, New Braunfels, and the Texas Hill Country structure 1031 exchanges the right way.
Nothing in this article is tax or legal advice. Every exchange is different, so talk with your CPA and a qualified intermediary before you make a move.
JJ Gorena II
Trey Group Commercial | eXp Realty
commercial@thetreygroup.com
