1. Sale of Property
The first step is to sell the relinquished property. The proceeds from the sale are held by a qualified intermediary, and the property owner must identify potential replacement properties within 45 days of the sale.
2. Identification of Replacement Property
Within 45 days of the sale, the property owner must identify potential replacement properties in writing to the qualified intermediary. The identified properties must meet certain criteria, including adherence to value and number restrictions.
3. Purchase of Replacement Property
The property owner must acquire the replacement property within 180 days of the sale of the relinquished property. The purchase amount and equity in the replacement property must be equal to or greater than those of the relinquished property to defer capital gains taxes successfully.