1031 Exchange Plan & Checklist

Taxpayer: [[Taxpayer Full Name]]
Relinquished Property: [[Relinquished Property Address]]
Target Property: [[Target Property Address]]
Qualified Intermediary: [[QI Name]]
Preparation Date: [[Preparation Date]]

This 1031 Exchange Plan & Checklist is a comprehensive guide and working document for structuring a tax-deferred exchange under Internal Revenue Code (IRC) §1031. It incorporates all mandatory federal requirements including strict timing, identification rules, Qualified Intermediary handling, and full equity/debt reinvestment to maximize deferral of capital gains and depreciation recapture.

All user-supplied values appear as `[[Token Name]]` placeholders. Complete each token with the actual information before execution. This document is not legal, tax, or financial advice. Consult qualified professionals for your specific situation.

1. Like-kind / qualifying-property requirement and held-for-investment use

IRC §1031 permits the deferral of gain or loss on the exchange of property held for productive use in a trade or business or for investment if the property received is of like kind.

• Only real property qualifies after the Tax Cuts and Jobs Act (real property for real property).
• The relinquished property and the target (replacement) property must both be held for productive use in trade or business or for investment.
• Personal residences, second homes used primarily for personal purposes, and property held primarily for sale (inventory or dealer property) do not qualify.
• Both properties must be located in the United States.

Qualification checklist for this exchange:

1. Confirm relinquished property has been held for investment or business use for at least one year (or longer where facts support investment intent).

2. Confirm target property will be held for investment or business use (rental, commercial, land held for appreciation).

3. Verify neither property is the taxpayer's primary residence or vacation home used predominantly for personal enjoyment.

4. Obtain written representation from [[Taxpayer Full Name]] that the properties meet the held-for-investment or productive-use test.

Relinquished Property Details
- Address: [[Relinquished Property Address]]
- Legal description: [[Relinquished Property Legal Description]]
- Current use: [[Investment Rental / Commercial / Land / Other Business Use]]
- Date acquired: [[Relinquished Property Acquisition Date]]
- Original cost basis: [[Relinquished Property Original Basis]]

Target Property Details
- Address: [[Target Property Address]]
- Legal description: [[Target Property Legal Description]]
- Intended use: [[Investment Rental / Commercial / 1031 Exchange Replacement Property]]
- Expected acquisition cost: [[Target Property Purchase Price]]

Failure to satisfy the like-kind and held-for-use requirements will cause the entire transaction to be treated as a taxable sale.

2. Strict timelines (45-day identification, 180-day exchange close) from relinquished-sale closing

Timing is strictly enforced with no extensions for weekends, holidays, or other reasons except in federally declared disasters.

• The 45-day identification period begins on the date the relinquished property is transferred (closing date of the sale of the relinquished property).
• The 180-day exchange period also begins on the relinquished closing date.
• The replacement property must be acquired no later than the earlier of (a) 180 days after the relinquished closing or (b) the due date (including extensions) of the taxpayer's tax return for the year of the transfer of the relinquished property.

Critical Deadlines for This Exchange

• Relinquished property closing date: [[Relinquished Closing Date]]
• 45-day identification deadline: [[45-Day Identification Deadline]]
• 180-day exchange completion deadline: [[180-Day Exchange Deadline]]
• Tax return due date (with extensions) for the year of relinquished sale: [[Tax Return Due Date]]

All identification must be delivered in writing to the Qualified Intermediary on or before the 45th day. Late identification is invalid.

The exchange is completed only when the taxpayer receives the target property by the 180-day deadline. Delays in closing on the target property past the deadline will disqualify the exchange.

3. Qualified Intermediary requirement (no constructive receipt of proceeds)

The taxpayer may not receive, pledge, borrow, or otherwise have access to or control over the proceeds from the sale of the relinquished property. Doing so creates "constructive receipt" and disqualifies the exchange.

• A Qualified Intermediary (QI) must be used in virtually all deferred exchanges.
• The QI must be an independent third party not related to the taxpayer and not the taxpayer's agent.
• The QI takes title to the relinquished property (or receives the proceeds) and uses the funds to acquire the target property.
• All exchange agreements, assignments, and notices must be executed before or at relinquished closing.

Qualified Intermediary for This Exchange
- QI Name: [[QI Name]]
- QI Company: [[QI Company Name]]
- QI Address: [[QI Address]]
- QI Phone: [[QI Phone Number]]
- QI Email: [[QI Email Address]]
- QI Exchange Agreement Date: [[QI Agreement Execution Date]]

Key QI Controls
- Taxpayer assigns rights to sell relinquished property to QI via written assignment notice prior to closing.
- All sale proceeds are wired directly to QI's escrow or trust account at relinquished closing.
- QI holds funds; taxpayer has no right to receive or direct funds outside the exchange.
- QI acquires target property and transfers it to taxpayer at target closing.

Any direct receipt of proceeds by the taxpayer or any constructive receipt (e.g., using proceeds as earnest money without QI) will trigger immediate taxation.

4. Identification rules (3-property / 200% / 95%)

The taxpayer must identify the target property or properties in writing to the QI within 45 days. Three safe-harbor identification rules exist:

1. Three-Property Rule: Identify up to three properties regardless of fair market value.

2. 200% Rule: Identify any number of properties as long as the total fair market value of all identified properties does not exceed 200% of the fair market value of the relinquished property.

3. 95% Rule: If the value test is exceeded, the taxpayer must actually acquire properties totaling at least 95% of the value of all identified properties.

Identification Notice Details
- Date of written identification: [[Identification Notice Date]]
- Method of delivery to QI: [[Certified Mail / Email with Read Receipt / Hand Delivery / QI Portal]]
- Properties identified:

1. [[Target Property 1 Full Address]], Estimated FMV: [[Target 1 FMV]]

2. [[Target Property 2 Full Address]], Estimated FMV: [[Target 2 FMV]]

3. [[Target Property 3 Full Address]], Estimated FMV: [[Target 3 FMV]]

Identification Rule Elected for This Exchange: [[Three-Property Rule / 200% Rule / 95% Rule]]

Revocation of Identification
- Written revocation must be delivered to the QI before the 45-day deadline.
- After the 45-day deadline, identification is irrevocable.

The identification must contain sufficient detail to unambiguously identify the property (street address, legal description, or other clear identifier).

5. Reinvestment of all equity + equal-or-greater debt to fully defer

To fully defer gain, the taxpayer must:

• Reinvest all net equity (sales price minus selling expenses, closing costs, and any debt relief) into the target property.
• Acquire target property with debt equal to or greater than the debt relieved on the relinquished property (or replace debt with cash).

Equity Reinvestment Calculation

• Gross sales price of relinquished: [[Relinquished Sale Price]]
• Less selling expenses and closing costs: [[Selling Expenses Amount]]
• Less mortgage or debt relieved: [[Debt Relieved on Relinquished]]
• Net equity to reinvest: [[Net Equity Amount]]

Target Property Requirements for Full Deferral
- Minimum cash/equity reinvestment: [[Net Equity Amount]]
- Minimum debt on target property: [[Debt Relieved on Relinquished]] (or higher)
- Target purchase price: [[Target Purchase Price]]

If the target costs more, the taxpayer may contribute additional cash. If the target costs less or has less debt, boot will result (see next section).

The QI must use 100% of the exchange proceeds toward the target acquisition. Any funds remaining after target acquisition that are returned to the taxpayer constitute boot.

6. Boot / taxable-gain triggers

Boot is any non-like-kind property received in the exchange. Boot is taxable to the extent of realized gain.

Types of boot:
- Cash boot (funds not reinvested)
- Debt relief boot (mortgage relieved exceeds mortgage assumed)
- Other property boot (personal property, notes, etc.)
- Excess equity not applied to target

Boot Analysis for This Exchange

• Cash to be received by taxpayer (if any): [[Cash Boot Amount]]
• Net debt relief (debt relieved minus debt assumed): [[Net Debt Relief Boot]]
• Other boot (describe): [[Other Boot Description]]
• Total boot: [[Total Boot Amount]]

Taxable Gain Limitation
The recognized gain is the lesser of:
- Realized gain on the relinquished property
- Total boot received

Even if boot is small, it triggers recognition of gain up to the boot amount. Depreciation recapture may be triggered on boot as well.

7. Deferred capital-gains and depreciation-recapture concept

A successful §1031 exchange defers, but does not eliminate, the gain.

• The basis in the target property is generally the cost of the target minus the deferred gain.
• Depreciation recapture (unrecaptured §1250 gain for real estate) is also deferred.
• When the target property is later sold in a taxable transaction, the deferred gain and recapture will be recognized (unless another qualifying exchange is done).
• The holding period of the relinquished property tacks onto the target for long-term capital gain purposes.

Gain Deferral Summary

• Estimated realized gain on relinquished: [[Estimated Realized Gain]]
• Estimated deferred gain: [[Estimated Deferred Gain]]
• Estimated basis in target property: [[Target Property Basis After Exchange]]
• Estimated unrecaptured §1250 gain deferred: [[Estimated Recapture Amount Deferred]]

Taxpayers should maintain detailed records of adjusted basis, accumulated depreciation, and deferred gain for future reference. The QI typically provides an exchange summary statement.

8. Exchange checklist and deadlines

Use this checklist to track every required action and document.

1. Engage Qualified Intermediary and execute exchange agreement, deadline: before relinquished closing.

2. Execute assignment of purchase/sale rights to QI for relinquished property.

3. Confirm relinquished closing; ensure all proceeds wired to QI.

4. Deliver written identification of target property(ies) to QI by 45-day deadline.

5. Execute purchase contract for target property (assign rights to QI if required).

6. Obtain lender approvals and coordinate debt assumption or new financing on target.

7. Confirm target property qualifies as like-kind and will be held for investment.

8. Complete target closing no later than 180-day deadline; QI funds the acquisition.

9. Receive title to target property in taxpayer's name (or disregarded entity if permitted).

10. Obtain final accounting and exchange summary from QI.

11. Update tax records and basis calculations.

12. File Form 8824 with the IRS for the year of the exchange (and subsequent years if multi-year).

Additional Pre-Closing Items
- Obtain current appraisals or broker price opinions if needed for identification values: [[Appraiser or BPO Provider]]
- Review environmental reports, surveys, title commitments on target: [[Target Due Diligence Items]]
- Confirm no personal use of target property is planned.

9. Key dates table

10. Documentation and record-keeping requirements

A successful exchange depends on meticulous documentation retained for the IRS and future reference.

Required Records to Maintain
- Original purchase documents and cost basis records for the relinquished property.
- All exchange agreements, assignment notices, and QI correspondence.
- Written identification notice and proof of timely delivery (certified mail receipt, email confirmation, or QI portal log).
- Closing statements (HUD-1 or Closing Disclosure) for both relinquished and replacement properties.
- Wiring instructions and proof of proceeds transfer to the QI.
- Purchase contract and title documents for the target property.
- Any appraisals, BPOs, or valuations used for identification or reporting.
- Form 8824 filed with the tax return for the year of the exchange.
- Depreciation schedules and adjusted basis calculations before and after the exchange.

Recommended Retention Period
Retain all exchange-related records for at least seven years after the tax return due date for the year the target property is eventually sold (or longer if state rules require). The tacked holding period and deferred gain must be tracked across the taxpayer's basis in the replacement property.

Basis Tracking Example
- Adjusted basis of relinquished property at time of sale: [[Relinquished Adjusted Basis]]
- Amount realized (after selling expenses): [[Amount Realized]]
- Realized gain: [[Realized Gain Amount]]
- Deferred gain: [[Deferred Gain Amount]]
- Basis in target property = purchase price of target minus deferred gain: [[Target Basis Calculation]]

11. Qualified Intermediary selection and due diligence

Not all QI providers are equivalent. Selection criteria include:

1. Independence: The QI must be unrelated to the taxpayer and have no agency relationship other than the exchange agreement.

2. Experience and track record: Years in business, number of exchanges handled annually, professional liability (errors & omissions) insurance coverage.

3. Financial strength: Segregated escrow/trust accounts, bonding or insurance on client funds, clear accounting practices.

4. Technology and service: Secure online portal for document delivery and status tracking, responsive staff, experience with the taxpayer's property type or market.

5. Fee transparency: Upfront fee schedule without hidden charges for extensions, additional properties, or failed deals.

QI Selection Checklist for [[Taxpayer Full Name]]
- [[QI Name]] has been in business [[QI Years in Business]] years and completed [[QI Annual Volume]] exchanges last year.
- E&O insurance: [[QI E&O Amount]] per claim / [[QI E&O Aggregate]] aggregate.
- Client funds are held in: [[Separate Trust / Escrow Account Description]]
- References from [[Tax Advisor / Attorney / Previous Client]] verified on [[Reference Check Date]].
- Fee quote: [[QI Fee Quote Description or Amount]]

Using a low-cost or unverified QI increases risk of disqualification.

12. Important caveats and professional-advice disclaimer

This plan is a template for educational and organizational purposes only.

• IRC §1031 contains many technical requirements and exceptions. Recent regulations and court decisions have addressed identification, QI independence, and constructive receipt.
• State laws may impose additional transfer taxes, recording requirements, or anti-abuse rules.
• Using a related-party QI or failing to observe assignment formalities can invalidate the exchange.
• The IRS has challenged "parking" arrangements and other structures that attempt to circumvent the rules.
• Taxpayers who acquire the target property before selling the relinquished (reverse exchange) need a separate Qualified Exchange Accommodation Arrangement (QEAA) structure.
• Changes in tax law (including basis step-up rules at death, opportunity zone interactions, or state conformity) can affect outcomes.
• This document does not address multi-party, build-to-suit, or partial exchanges in detail.

Reverse and Improvement (Build-to-Suit) Exchanges Note
Reverse exchanges (acquiring replacement before selling relinquished) and build-to-suit exchanges require a Qualified Exchange Accommodation Titleholder (QEAT) and additional agreements. This document focuses on the standard deferred forward exchange. Taxpayers considering reverse or improvement structures must engage the QI early and obtain specialized legal/tax counsel.

Professional Advice Required

[[Taxpayer Full Name]] must consult a qualified tax attorney, CPA, or enrolled agent licensed in the relevant jurisdiction, and a reputable Qualified Intermediary before executing any documents or transferring property. Figures, deadlines, and interpretations must be verified against current IRS guidance (Publication 544 and Form 8824 instructions) and the Internal Revenue Code as of the date of the transaction.

The authors and publishers of this template disclaim all liability for any loss or damage arising from reliance on this document. Verify every requirement independently.

Taxpayer Acknowledgment

I have read this 1031 Exchange Plan & Checklist. I understand the timelines are absolute, that a Qualified Intermediary is mandatory, that full equity and debt replacement is required for full deferral, and that I must provide accurate information for all [[Token Name]] fields.

Taxpayer Signature: _______________________________ Date: [[Signature Date]]

Printed Name: [[Taxpayer Full Name]]

QI Acknowledgment of Receipt of Plan

QI Representative Signature: _______________________________ Date: [[QI Receipt Date]]

Printed Name / Title: [[QI Representative Name and Title]], -

Statutory and Regulatory References (Federal, as of June 2026)

• IRC §1031, Exchange of property held for productive use or investment
• Treas. Reg. §1.1031(a)-1, §1.1031(b)-1, §1.1031(k)-1 (deferred exchanges, identification, QI rules, 45/180 day periods, 3-property/200%/95% rules)
• IRS Form 8824 Instructions (current year)
• IRS Publication 544 (Sales and Other Dispositions of Assets)

> ⚠️ Template only, not tax, legal, or financial advice. This 1031 Exchange Plan & Checklist is provided for informational purposes. All requirements under IRC §1031, Treasury Regulations, and applicable state law must be independently verified by qualified professionals. Deadlines are strictly enforced. User-supplied information is represented by `[[Token Name]]` placeholders. Consult your tax advisor, attorney, and Qualified Intermediary before proceeding.

*Sources: Internal Revenue Code §1031; Treas. Reg. §1.1031(k)-1; IRS Form 8824 and Publication 544 (as of June 2026).*