The Tax Consequences of a 1031 Exchange

Use all cash proceeds in the purchase buying replacement property for less than the net sales price of your relinquished property constitutes a partial exchange and creates a taxable event. If you have a purchase for the first business day after your $45 day identification deadline, the transfer may not be possible for several days or even weeks after closing. The intent of a 1031 exchange is to defer, not forgive taxes.