Talk to an Advisor

Actual Receipt

Actual Receipt in the context of the 1031 exchange industry refers to the moment when an exchanger (the taxpayer performing the exchange) physically or constructively takes possession or control of the replacement property during the course of a like-kind exchange.

During a 1031 exchange, the exchanger is required to identify and receive the replacement property within specific timeframes. In most cases, to prevent the exchanger from having actual receipt of the proceeds from the relinquished property, a Qualified Intermediary (QI) is used to facilitate the transaction. Actual receipt of the funds by the exchanger during the exchange process can jeopardize the tax-deferred status of the transaction.

The actual receipt of the replacement property is a crucial step in completing a 1031 exchange. The exchanger is typically required to acquire the replacement property within 180 days of transferring the relinquished property or the due date of the exchanger’s tax return for the taxable year in which the transfer of the relinquished property occurs, whichever is earlier.