Are you planning to sell a multi-family and roll the proceeds into another Boston investment property without taking a tax hit this year? If so, the 1031 exchange timeline is your most important tool. The rules are clear and the clock is unforgiving, especially in fast-moving neighborhoods like Roslindale. In this guide, you’ll learn each step, the exact deadlines, how to prepare your identification list, and practical tips for closing on time in Greater Boston. Let’s dive in.

What a 1031 exchange does

A 1031 exchange lets you defer federal income taxes on the sale of investment real estate when you exchange it for other like-kind real property held for investment or business use. After the 2017 tax law changes, only real property qualifies, which includes multi-family buildings.

If you are trading up, consolidating assets, or shifting into a new submarket, a 1031 can help you keep more capital working. You will report the exchange using IRS Form 8824 for the year your sale closes.

The 1031 timeline at a glance

Two strict deadlines start on the day your sale closes and title transfers to the buyer:

• Identification deadline: Day 45. You must identify your replacement property or properties in writing by Day 45.
• Exchange completion deadline: Day 180. You must take title to your replacement property by the earlier of Day 180 or your tax return due date for that year, including extensions.

These are calendar days. Weekends and holidays count. Missing either deadline usually disqualifies the exchange and triggers tax.

Step-by-step: Day 0 to Day 180

Before you list or sell

• Engage a qualified intermediary (QI) early and sign an exchange agreement before your sale closes.
• Speak with your CPA or tax attorney about structure and state treatment in Massachusetts.
• Pre-underwrite financing for likely targets so you can close within the 180-day window.
• Build a short list of potential replacements that fit your plan, such as Roslindale triple-deckers or nearby multi-family options.

Day 0: Close the sale

• Your QI must receive and hold the sale proceeds to prevent constructive receipt.
• Ensure closing instructions and settlement statements show funds moving through the QI.
• Keep all documents and date-stamped acknowledgments from your QI.

Days 1–45: Identify replacements

• Deliver a written, unambiguous identification to your QI by Day 45. Use street addresses and, if needed, legal descriptions to avoid ambiguity.
• You can use one of these identification rules:
  • Three-property rule: identify up to three properties, any value.
  • 200% rule: identify any number of properties if the total value does not exceed 200% of what you sold.
  • 95% rule: identify more than allowed above, then acquire at least 95% of the total value you identified.
• Identification is required even if financing, inspections, or permits are still in process. Do not rely on vague language. “Multi-family in Roslindale” is not sufficient.

Practical Roslindale tip: Many multi-family deals here move fast. Line up lender terms in advance, coordinate with listing agents about exchange timelines, and prepare to schedule inspections quickly.

Days 46–180: Execute and close

• Work with your QI, lender, and closing attorney so funds route through the QI at every step.
• Coordinate with a Suffolk County title company experienced in exchange closings. Confirm recording requirements and wire cutoffs so you do not bump into Day 180.
• Remember the earlier-of rule: your extended tax return due date can still cut off the 180-day period. Plan your closing date with your CPA.
• If your first-choice property stalls, you may substitute another identified property, subject to the identification rules, but only if you listed it by Day 45.

After closing: File and store

• Your QI should provide a closing summary and supporting documents.
• File IRS Form 8824 with your tax return for the year your sale occurred.
• Keep your exchange agreement, identification letter, settlement statements, deeds, and QI records for your files.

Example timeline you can model

• Day 0: March 1. You close on your Jamaica Plain three-family that you held as a rental.
• Day 45: April 15. Your written identification is due. You identify two Roslindale two-families and one West Roxbury three-family.
• Day 180: August 28. You must close on your chosen replacement property or properties by this date unless your tax return due date, including extensions, falls earlier.

The qualified intermediary’s role

Your QI is an independent third party that implements the exchange and prevents constructive receipt of funds. The QI will:

• Execute an exchange agreement before any transfer occurs.
• Receive and safeguard proceeds from your sale, then disburse funds to acquire your replacement property.
• Accept your written Day 45 identification and acknowledge receipt.
• Coordinate with escrow, title, and lenders to ensure funds move only through the QI.
• Provide closing statements and an exchange summary you will use to prepare Form 8824.

Limitations to note:

• The QI cannot be your agent or a related party that would trigger constructive receipt. Choose a firm with experience, proper custodial accounts, and insurance protections.
• The QI does not provide tax advice unless separately licensed. Keep your CPA and attorney in the loop.

Identification rules explained

Your identification must be precise and timely. Choose the rule that best fits your plan:

• Three-property rule: Simple and common if you are pursuing one or two Boston assets and want a backup.
• 200% rule: Useful if you want a longer list of smaller assets, as long as the total value is no more than twice what you sold.
• 95% rule: Rare in practice because you must acquire at least 95% of the value you identified.

Whichever path you choose, keep copies of your signed identification and the QI’s written receipt. Ambiguous or late identification is one of the most common exchange failures.

Taxes, basis, and boot

• Boot: Any non-like-kind property or cash you receive can be taxable, including net reductions in mortgage debt (mortgage boot).
• Basis: Your deferred gain reduces the basis in your replacement property. Your depreciation schedule generally carries forward.
• Reporting: You will report the exchange on Form 8824 for the tax year your sale occurred.

A 1031 exchange defers taxes. It does not eliminate them. If you later sell the replacement property in a taxable sale, you will recognize the deferred gain at that time unless you complete another exchange.

Reverse and improvement exchanges

You can structure a reverse exchange if you need to acquire the replacement before you sell. Title is typically parked with an Exchange Accommodation Titleholder during the process. You can also complete an improvement exchange if you need to make improvements within the 180-day window.

Both options are more complex, use the same 45- and 180-day timelines, and require careful planning. Start early with your QI, CPA, and attorney if you are considering either approach.

Massachusetts and Boston practicalities

• State conformity: Massachusetts treatment can differ from federal rules and can change. Confirm current state guidance with a Massachusetts tax professional.
• Recording and conveyance: Suffolk County recording is standardized, but timing matters. Align deed recording, lender requirements, and wire cutoffs with your Day 180.
• Competitive dynamics: Roslindale and surrounding neighborhoods can see multiple offers. Align your purchase and sale contingencies with your exchange deadlines, and be candid with sellers about your QI process so everyone can plan for smooth closings.

Common pitfalls to avoid

• Missing the Day 45 identification.
• Using vague identification instead of specific addresses or legal descriptions.
• Touching or receiving sale proceeds rather than routing funds through the QI.
• Choosing an inexperienced or improperly insured QI.
• Overlooking related-party limitations.
• Delaying financing or title work until late in the process.
• Miscounting the earlier-of rule for the Day 180 deadline.
• Ignoring Massachusetts state reporting or adjustments that may apply.

Your Greater Boston exchange checklist

Before sale

• Hire a qualified intermediary and sign your exchange agreement before closing your sale.
• Consult your CPA or tax attorney and Boston real estate counsel.
• Pre-underwrite financing and confirm what lenders will require for a 1031.
• Shortlist Roslindale and nearby replacement properties with clear value ranges.

At sale (Day 0)

• Route all proceeds to the QI. Confirm this on the HUD-1 or Closing Disclosure.
• Keep the QI’s date-stamped confirmation for your timeline.

Within 45 days

• Send the QI a signed, unambiguous identification letter and get written receipt.
• If using the three-property or 200% rule, document valuations and your methodology.

Day 1 to Day 180

• Coordinate lender underwriting, title clearance, and inspections early.
• Schedule closing with attention to wire cutoffs and recording windows in Suffolk County.
• If needed and permitted under your identification, switch to a backup property before deadlines.

After closing

• Gather the exchange agreement, settlement statements, deeds, QI trust statements, and the QI’s exchange summary.
• File Form 8824 with your federal return for the year your sale closed.
• Confirm and file any Massachusetts reporting that applies.

How Mission Realty Advisors helps

You control your 1031 outcome by controlling timing, financing, and deal flow. Our team pairs neighborhood-level expertise in Roslindale and Greater Boston with a strategy-first process that supports investors through each phase of a 1031. We help you:

• Source on and off-market multi-family opportunities that fit your Day 45 list.
• Underwrite income, renovation scope, and exit scenarios so you can act within the 180-day window.
• Coordinate with your QI, lender, and closing attorney to align documents and timing.
• Negotiate contingencies and schedules that respect your exchange deadlines.

If you are evaluating a sale or lining up replacement options, connect with us early so we can help you plan your timeline and target properties with confidence. Ready to start a 1031 in Greater Boston? Reach out to Mission Realty Advisors for a focused conversation about your goals.

Mission Realty Advisors

FAQs

When does the 1031 exchange clock start?

• The timeline starts on the date you transfer title to the buyer of your relinquished property, which is your sale closing date (Day 0).

Are 45- and 180-day deadlines business days or calendar days?

• They are calendar days. Weekends and holidays count toward both deadlines.

How many replacement properties can I identify?

• You can use the three-property rule, the 200% value rule, or the 95% rule. Most investors use the three-property rule for simplicity.

Can my attorney or broker serve as the qualified intermediary?

• Avoid using anyone who could be considered your agent for constructive receipt analysis. Choose an independent QI with experience, proper accounts, and insurance.

What happens if I miss Day 45 or Day 180?

• The exchange generally fails and you will recognize gain. Exceptions are rare, so plan ahead and manage your timeline carefully.

Is a 1031 exchange tax-free forever?

• No. It defers recognition of gain. If you later sell your replacement property in a taxable sale, the deferred gain becomes taxable unless you complete another exchange.

How does Massachusetts treat 1031 exchanges?

• State treatment can differ from federal rules and may change. Confirm current Massachusetts Department of Revenue guidance with a local tax professional.