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Video: When Does a 1031 Exchange Start?

Accruit
02/26/25
In this video, we explain that a 1031 Exchange officially begins when the benefits and burdens of ownership transfer from the Seller to the Buyer, not when the sale proceeds reach the Qualified Intermediary. Understanding this timing is crucial for Exchangers to meet IRS deadlines, as the 180-day exchange period starts at the moment of ownership transfer.
When Does a 1031 Exchange Start?

When does a 1031 Exchange officially start? Some Exchangers believe it starts when the sale proceeds reach the Qualified Intermediary, but the IRS takes a different position. The exchange begins when the benefits and burdens of ownership transfer from the Seller to the Buyer.

In this video, we explain how this works using a real-world example. If a closing happens on a Friday at 5 PM and a fire breaks out the next day, whose insurance company would be responsible? The answer is the Buyer's insurance, because the transfer of ownership has already occurred. This is the point at which the 1031 Exchange starts and when the 180-day exchange period begins.

Understanding this timing is crucial for exchangers to meet IRS deadlines and stay compliant. Watch now to learn more.