Two firm IRS deadlines govern every 1031 exchange. Within 45 calendar days of selling your relinquished property, you must identify potential replacement properties in writing to your qualified intermediary. Within 180 calendar days of the original sale, you must close on one or more of those identified properties. Both deadlines are absolute. There are no extensions for weekends, holidays, or unavoidable delays, and missing either disqualifies the exchange.

Both the relinquished and replacement properties must be held for investment or productive business use. Rental properties, multi-family buildings, commercial real estate, and raw land all qualify. Primary residences, second homes, and properties held for resale (such as fix-and-flip inventory) do not qualify. The "like-kind" requirement is broad for real property: most investment real estate is considered like-kind to most other investment real estate, regardless of whether it is residential, commercial, or land.

Yes. The IRS requires that the proceeds from the sale of the relinquished property be held by a qualified intermediary (QI) throughout the exchange. If the seller takes possession of the funds at any point, even briefly, the exchange is invalidated and the gain becomes immediately taxable. The QI must be selected and the exchange documents must be in place before the relinquished property closes. Marc Dosik and the Fed City Team work with experienced DMV-area QIs and can introduce you to qualified options.

Yes. Section 1031 is a federal provision and applies uniformly across the United States, so investment property in any of the three jurisdictions can be exchanged for property in any other. State-level tax treatment may differ, however. DC, Maryland, and Virginia all conform to federal 1031 deferral, but Maryland and Virginia impose non-resident withholding requirements that can affect the cash flow of the transaction. Discuss state-level implications with your tax advisor before initiating an exchange.

"Boot" refers to non-like-kind property received in an exchange, which is taxable. The most common forms are cash boot (when the replacement property costs less than the relinquished property and the difference goes to the seller) and mortgage boot (when the debt on the replacement property is less than the debt on the relinquished property). Even a partial exchange can be valuable: only the boot is taxed, and the remaining gain stays deferred.

A delayed exchange is the standard structure: sell the relinquished property first, then identify and acquire the replacement property within the 45/180-day windows. A reverse exchange flips that order: acquire the replacement property first using an exchange accommodation titleholder, then sell the relinquished property within 180 days. Reverse exchanges are useful in competitive markets where the right replacement appears before the original property closes, but they require additional structuring and are typically more expensive than delayed exchanges.