Your Ultimate 1031 Exchange Checklist

Presented by TD Commercial Group – Your Net Lease Investment Partner

Investors looking to maximize gains and defer capital gains tax know that a 1031 Exchange can be a game-changer. But timing and accuracy are critical. At TD Commercial Group, we’ve put together a step-by-step checklist to guide you through a smooth and successful 1031 Exchange transaction.

Before the Sale of Your Relinquished Property

✅ Consult a 1031 Exchange Specialist:
Engage with a trusted Qualified Intermediary (QI) before entering into any sales agreement. The QI prepares the necessary exchange documents and ensures IRS compliance.

✅ Include 1031 Language in the Sale Contract:
Your purchase agreement should clearly state that the seller intends to complete a 1031 exchange and that the buyer agrees to cooperate—at no cost or liability.

✅ Vet Your Replacement Strategy Early:
Start narrowing down potential replacement properties in advance. Work with experienced brokers (like TD Commercial Group) who specialize in net lease investments and understand your long-term goals.

At the Time of Closing

✅ Use Your QI for Funds Handling:
Proceeds from the sale must go directly to your Qualified Intermediary. Touching the funds can disqualify your entire exchange.

✅ Confirm Property Title & Entity Matching:
Title to the replacement property must be held in the same name/entity as the relinquished property. Double-check this with your closing team.

After the Sale (Within 45 Days)

✅ Identify Replacement Properties:
You must formally identify one or more potential replacement properties within 45 calendar days of selling your relinquished asset. Identification must be submitted in writing to your QI.

Rules for Identification:

  • Three Property Rule: Name up to three properties, regardless of value.

  • 200% Rule: Name more than three properties if their total value doesn’t exceed 200% of the relinquished property’s sale price.

  • 95% Rule: If identifying more than three properties exceeding 200%, you must close on at least 95% of the total value identified.

Within 180 Days: Close on Replacement Property

✅ Timely Acquisition:
You have 180 calendar days from the sale of your relinquished property to close on the replacement property. Timing is strict, with no exceptions.

✅ Coordinate Closing with Your QI and Legal/Title Teams:
Ensure documents reflect 1031 Exchange language and verify that funds are transferred properly through the QI.

Additional Tips from TD Commercial Group

  • Documentation Is Everything: Keep organized records of timelines, contracts, identification letters, and closing statements.

  • Plan for Boot: If your replacement property costs less than what you sold, the difference (“boot”) may be taxable.

  • Use Strategic Leverage: Leverage may allow you to trade into higher-value assets and improve cash flow—but it must be carefully structured to meet IRS rules.

Why Choose TD Commercial Group?

At TD Commercial Group, we specialize in net lease investments ideal for 1031 Exchange buyers. Our clients benefit from:

  • Exclusive Access to High-Performing Net Lease Deals

  • Turnkey Exchange Support, Start to Finish

  • Detailed Market Comparisons to Maximize Value

  • Connections to Top Tier QIs, Legal, and Tax Professionals

We handle the complexity so you can focus on building your portfolio—tax-efficiently.

Have Questions? Ready to Start?
Let’s ensure your next exchange is your best. Contact TD Commercial Group today or visit our 1031 Exchange Resource Center to download additional tools and guides.

FAQ’s

1. What happens if I miss the 45-day or 180-day deadlines—can I get an extension under any circumstances?

Unfortunately, no. The IRS enforces the 45-day and 180-day deadlines with strict, non-negotiable precision. These are calendar days, not business days, and no extensions are granted—even for weekends, holidays, or closing delays.

The only exception is if the IRS declares a federal disaster (e.g., hurricane or wildfire) that directly affects you or the properties involved. In that case, an official extension may be granted, but this is rare and narrowly defined.

Bottom line: Start early, engage your QI as soon as a sale is anticipated, and work with a proactive broker like TD Commercial Group to stay on track.

2. How do I ensure the replacement property qualifies under 1031 rules, especially if I’m interested in something like a net lease retail asset?

To qualify, your replacement property must be considered “like-kind” real estate—which, broadly speaking, means it must be investment or business-use real estate located in the U.S.

The good news is that net lease retail assets absolutely qualify, as long as they are held for investment purposes and not for personal use or immediate resale.

What doesn’t qualify:

  • Primary residences or second homes

  • Flipped properties or dealer inventory

  • Stocks, REIT shares, or partnership interests

Working with a firm like TD Commercial Group ensures you’re selecting institutional-grade net lease properties that not only qualify but also help grow your income and preserve wealth long-term.

3. Can I use financing on the replacement property and still qualify for full tax deferral?

Yes, you can use financing, and it’s often a strategic move—but the debt structure must meet or exceed what you had on the relinquished property.

Here’s how to maintain full deferral:

  • The purchase price of the replacement property must be equal to or greater than what you sold.

  • Any debt paid off in the sale must be replaced by new debt or additional cash.

  • If the replacement involves less debt or a lower purchase price, the difference may be considered “boot”—which is taxable.

Pro tip: TD Commercial Group can help structure deals and refer lenders that align with IRS rules, so you avoid surprises and optimize returns.