Financing a 1031 Exchange

Build the exchange and financing timelines together

A deferred exchange generally requires replacement-property identification within 45 days and receipt within 180 days or the applicable tax-return due date, whichever is earlier. Have a qualified intermediary and tax adviser confirm the rules for your exchange.

Loan approval does not extend an exchange deadline. Schedule appraisal, title, entity and funding requirements around the actual timeline.

Document exchange funds clearly

The lending guidelines require the exchange agreement, the final settlement statement verifying net proceeds from the relinquished property and a qualified intermediary letter verifying funds available.

Exchange proceeds cannot satisfy reserve requirements under the supplied lending guidelines. Reverse exchanges are ineligible under those guidelines, even though tax law recognizes additional exchange structures in other contexts.

Choose the replacement property on its own merits

The property must meet the selected loan program’s occupancy, condition, rent and value requirements. A tax deadline should not cause the underwriting assumptions to outrun the property’s actual cash flow.

Review leases, insurance, taxes and repairs before relying on the replacement asset’s projected return. Financing terms still depend on the borrower, collateral and transaction.

Keep the professional roles aligned

The qualified intermediary handles exchange mechanics, your tax adviser assesses tax treatment, and the lending team reviews financing. Keep the purchasing entity and title instructions consistent across the transaction.

• Exchange agreement and sale settlement statement.
• Intermediary verification of available proceeds.
• Replacement-property contract, rent documents and entity information.
• Separate verified reserves and an appraisal/closing timeline.