Step 1 · Engage a Qualified Intermediary
Before you sell, you sign an Exchange Agreement with a Qualified Intermediary. The QI — not you — will hold the proceeds, which is what keeps the IRS clock ticking on a tax-deferred exchange.
Step 2 · Sell & Receive Proceeds in Escrow
You close on the relinquished property like any normal sale — except the proceeds wire directly to the QI escrow account. You never touch the money. If you do, the exchange is dead.
Step 3 · Identify Within 45 Days
From the day your sale closes, you have exactly 45 calendar days to identify up to three replacement properties in writing. Miss this hard deadline and the exchange fails — capital gains tax becomes due.
Step 4 · Close Within 180 Days
From the day your sale closed, the clock is ticking. You must take title to your replacement property no later than day 180. The QI wires escrow funds straight to closing; you sign deeds — not checks.
Step 5 · Defer the Tax. Compound the Equity.
Done correctly, every dollar of capital gain stays invested. You can roll the same equity through exchange after exchange — building a larger portfolio than you could have if you paid tax along the way.