Engage a Qualified Intermediary to Set Up the Exchange Account – The exchange account must be opened prior to the close of escrow of the Relinquished Property (the property you are selling). Doing this after the close of escrow would deem the exchange invalid, and subject to capital gain tax.

Sales Contract Must Include Necessary 1031 Exchange Language – The buyer of the Relinquished property must be notified of the seller’s intent to participate in a 1031 exchange and acknowledge such intent. Fidelity Asset Exchange can work with your real estate agent to provide such language.

Start Looking for a Replacement Property – The 45-day starts from the close of escrow of the Relinquished property. So you may want to start searching for the Replacement property as soon as possible before the close of escrow.

Complete the Sale of the Relinquished Property – Sign the 1031 exchange documents at the close of escrow. To 100% defer the capital gain tax, all proceeds from the sale must be deposited into the 1031 exchange account directly from escrow.

Submit the Replacement Property Identification Letter – Submit to the Qualified Intermediary in writing the Replacement property(ies) identified for the exchange no later than 45 days from the close of escrow of the Relinquished property.

Purchase Contract Must Include Necessary 1031 Exchange Language - The seller of the Replacement property must be notified of your intent to participate in a 1031 exchange and acknowledge such intent.

Complete Acquisition of the Replacement Property – Using the funds from your 1031 exchange account, complete the purchase of the Replacement property within 180 days from the close of escrow of the Relinquished property. The 1031 exchange is now completed.