1031 Exchange Deadlines for New York Investors: The 45-Day and 180-Day Rules

If you plan to sell New York investment or business real estate, you have probably heard that a “1031 exchange” can defer the tax on your gain. What often gets lost is how unforgiving the calendar is: the deadlines are written into the Internal Revenue Code and its regulations, and missing one can mean the exchange does not qualify. Here are the rules as they stand in October 2026.

What Qualifies: Real Property Held for Business or Investment

The core rule is in 26 U.S.C. § 1031(a)(1): no gain or loss is recognized “on the exchange of real property held for productive use in a trade or business or for investment if such real property is exchanged solely for real property of like kind which is to be held either for productive use in a trade or business or for investment.”

• Real property only. The 2017 tax law (Pub. L. 115-97) substituted “real property” for “property” for exchanges completed after December 31, 2017. Equipment, vehicles, art, and other personal property no longer qualify.
• Not property held for sale. Section 1031(a)(2) says the rule does not apply to “real property held primarily for sale”—so property bought to resell quickly, and dealer inventory, generally fall outside it.
• U.S. for U.S. Under § 1031(h), real property in the United States and real property outside the United States are not of like kind.

As of October 2026, section 1031 has not been amended since the 2017 change, including by the 2025 federal tax law.

The Two Clocks: 45 Days and 180 Days

Both deadlines start on the same day—the date you transfer the relinquished property (the one you are giving up)—and they run at the same time. The 180 days are not added to the 45.

Source: 26 U.S.C. § 1031(a)(3); 26 C.F.R. § 1.1031(k)-1(b)(2).

The “earlier of” language matters most for late-year sales: if your return is due the following April without an extension, that date can arrive before day 180 and cut the window short. Filing an extension can preserve the full 180 days—raise it with your tax adviser early.

If you give up several properties on different dates, both periods are measured from the earliest transfer (§ 1.1031(k)-1(b)(2)(iii)).

How Many Properties Can You Identify?

The regulation, 26 C.F.R. § 1.1031(k)-1(c)(4), caps how many replacement properties you may identify:

• The 3-property rule: up to three properties, regardless of their value; or
• The 200-percent rule: any number of properties, as long as their combined fair market value at the end of the identification period does not exceed 200 percent of the combined value of the properties you gave up.

Over-identifying is costly. If you exceed both limits, the regulation treats you “as if no replacement property had been identified”—with two exceptions. Property you actually receive before the identification period ends still counts, and under the 95-percent rule the identification holds if you acquire identified property worth at least 95 percent of the total value of everything you identified.

The Qualified Intermediary Safe Harbor

Deferred exchanges commonly run through a qualified intermediary. Under § 1.1031(k)-1(g)(4), a qualified intermediary is a person who is not the taxpayer or a “disqualified person” (a term the regulation defines) and who enters into a written exchange agreement with you. Under that agreement, the intermediary acquires and transfers the relinquished property and acquires and transfers the replacement property to you.

The safe harbor applies only if the exchange agreement “expressly limits the taxpayer’s rights to receive, pledge, borrow, or otherwise obtain the benefits of money or other property held by the qualified intermediary.” If you actually or constructively receive the sale proceeds, the exchange can fail. Because the intermediary has a defined role in both closings, the exchange agreement needs to be coordinated with the sale contract and closing.

Exchanges With Family or Related Entities

Section 1031(f) adds a two-year rule for exchanges with a “related person” (as defined by reference to §§ 267(b) and 707(b)(1)). If either side disposes of the exchanged property within two years after the last transfer in the exchange, the deferral is lost. Dispositions after a death, certain involuntary conversions, and dispositions the IRS is satisfied had no tax-avoidance principal purpose are not counted. If a family member or a company you control is on the other side, plan with your tax adviser before you sign.

New York Closing Costs Still Apply

Section 1031 is a federal income-tax rule. New York’s transfer tax under Tax Law § 1402 is imposed on conveyances, and an exchange typically involves at least two closings, each with its own transfer, recording, and title costs. Do not assume an exemption applies; raise it with us and with your tax adviser before the closing. As of October 2026, according to the statute and the taxing agencies:

• New York State transfer tax: $2 per $500 of consideration (0.4%), plus an additional $1.25 per $500 (0.25%) in New York City for non-residential conveyances of $2 million or more and residential conveyances of $3 million or more.
• NYC Real Property Transfer Tax (commercial): 1.425% at $500,000 or less and 2.625% above $500,000, per the NYC Department of Finance.
• Mortgage recording tax applies if you finance the purchase; NYC commercial mortgages of $500,000 or more carry 2.8% in total (state and city taxes combined), according to the NYC Department of Finance.

The Tax Department says the state transfer tax is paid by the grantor (seller); the contract can shift it to the buyer, and the buyer becomes responsible if the seller does not pay or is exempt. On a residential purchase of $1 million or more, the mansion tax is paid by the buyer (grantee). Contracts can allocate other closing costs, and practice varies by county and region. See New York Closing Costs: Transfer Tax and Mansion Tax.

Where a Real Estate Lawyer Fits

Rausa Russo Law handles the real estate side of exchanges for investors throughout New York State: contracts that accommodate the exchange, closing dates coordinated against the 45- and 180-day periods, and coordination with the qualified intermediary, the title company, and the entities on each side. If you hold property in an LLC, see buying New York property in an LLC for the 2026 filing rules. We do not give tax advice; whether your exchange qualifies is a question for your tax adviser.

Frequently Asked Questions

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