A 1031 exchange may involve new construction replacement property, but a builder’s schedule does not replace the federal exchange calendar. The IRS generally requires deferred replacement property to be identified in writing within 45 days and received by the earlier of 180 days after the relinquished transfer or the tax-return due date with extensions. In a 2025 Chief Counsel letter released in December 2025, the IRS reiterated that the 180-day period is statutory and generally cannot be extended outside specified relief authority. Start with the taxpayer, use, title, property description, value to be received, qualified intermediary, financing, and realistic delivery date before relying on the build.
Separate a completed builder purchase from an improvement exchange
Buying a completed or nearly completed investment property from a builder can look like a standard deferred acquisition if the taxpayer, held-for-investment use, identification, receipt, and other requirements are satisfied. Using exchange funds for construction or improvements before the taxpayer receives title may require a different structure, including an exchange accommodation titleholder and detailed professional planning. A broker or builder should not improvise that structure.
Identify the property clearly and on time
The IRS Form 8824 instructions require written identification within 45 days and a clear, recognizable description such as a legal description, street address, or distinguishable name. When property is being produced, the construction and improvement description can matter. Confirm the exact identification language, permitted recipient, backups, and delivery evidence with the qualified intermediary, CPA, and attorney before the deadline.
Underwrite what can actually be received by day 180
A construction calendar is not the exchange calendar. Test entitlements, permits, site control, utilities, contractor status, plans, materials, inspections, certificate or occupancy path, financing, draws, contingencies, title transfer, and realistic value at receipt. The value of land and work completed by transfer may differ from the hoped-for finished project. Do not count future work as if it had already been received.
Keep builder warranty and property diligence separate
For a Nevada qualifying new single-family residence, NRS 624.602 requires a written builder warranty tied to a written punch list. That warranty can support property diligence but does not establish exchange qualification, investment suitability, rent, legal use, tax treatment, or deadline compliance. Inspect the property, contract, leases or market assumptions, HOA or restrictions, insurance, management plan, and capital needs on their own evidence.
Assign each professional a written decision
The qualified intermediary addresses exchange mechanics within its engagement; the CPA and attorney address tax and legal application; the lender addresses financing and draw timing; the contractor, inspectors, title and escrow professionals, insurer, property manager, and broker address their own evidence. Record who approved which assumption and by what date. A builder delivery estimate is not QI, tax, legal, financing, or title approval.
FAQ
Can an unfinished building be identified as 1031 replacement property?
Property being produced can be part of a deferred-exchange analysis, but identification and receipt rules are technical. Use a clear written description and confirm the structure with the qualified intermediary, CPA, and attorney before the 45-day deadline.
Does construction have to be finished within 180 days for a 1031 exchange?
The taxpayer generally must receive qualifying replacement property by the statutory deadline. What land and completed improvements count, and how an improvement exchange is structured, require transaction-specific QI, tax, and legal guidance.
Can a builder delay extend the 1031 exchange period?
A normal construction delay does not create an automatic extension. The IRS has limited authority to postpone statutory deadlines in specified circumstances, such as certain federally declared disasters. Verify any relief rather than assuming it applies.
Primary sources and limits
- Nevada Legislature, NRS 624.602 builder warranty
- IRS, Instructions for Form 8824
- IRS Chief Counsel letter 2025-0008
General education only. Newness, permits, inspections, a punch list, warranty, builder incentive, referral, construction schedule, or exchange structure does not establish one property’s condition, completion, legal use, value, financing, insurance, tax treatment, exchange qualification, license status, professional acceptance, or future result. Verify the current contract, specifications, plans, options, permits, inspections, punch list, builder response, warranty, license, title, financing, written Loan Estimates, insurance, HOA or assessments, taxpayer, qualified intermediary, exchange structure and dates, receiving professional, client consent, responsible people, and completion evidence with the appropriate licensed real-estate professionals, lender, insurer, inspector, contractor, qualified intermediary, CPA, attorney, tax adviser, title and escrow professionals, association, government agencies, and other qualified professionals. No individualized legal, tax, lending, insurance, securities, appraisal, inspection, property-management, fair-housing, or investment advice is provided. A CPA, attorney, and qualified intermediary must evaluate the taxpayer, investment-use position, exchange structure, acquiring party, title, deadlines, identification, receipt, basis, liabilities, boot, reporting, and vendor documents.
Related: underwriting Las Vegas replacement property, verifying replacement-property title and records, contact 1031 Exchange Elite.