Relinquished Property

Relinquished property is the real estate an investor sells or transfers in a 1031 exchange, the property given up in return for replacement property. It must have been held for investment or for use in a trade or business; a primary residence or property held mainly for resale does not qualify.

Key Points

• Starting the clock: The 45-day identification period and the 180-day exchange period both begin on the date the relinquished property is transferred.
• Sale proceeds: In a delayed exchange, the proceeds generally go to a qualified intermediary rather than to the investor, because receiving the cash can make the gain taxable.
• Value to match: To defer all of the gain, the replacement property generally needs equal or greater value and debt than the relinquished property, or added cash.

To learn more, find your 1031 exchange deadlines, or review the 1031 Exchange Checklist.