Thinking about selling an investment property in Fremont County and worried about the tax hit? A 1031 exchange can defer capital gains taxes if you follow the rules with precision. You want a clear plan that protects your timeline, keeps funds secure, and fits the realities of rural Colorado closings. In this guide, you’ll learn the core 1031 rules, the two non-negotiable deadlines, how to work with a Qualified Intermediary, and Fremont County–specific steps that keep your exchange on track. Let’s dive in.
What a 1031 exchange does
A 1031 exchange lets you defer capital gains taxes when you sell property held for investment or business use and buy other like-kind real property in the United States. Since 2018, the rules focus on real estate only, not personal property. Most investor-to-investor real estate swaps qualify as like-kind, but individual facts matter. Always confirm your eligibility with a tax advisor before you list.
The two critical deadlines
- Identification period: You have 45 calendar days from the date you transfer your relinquished property to identify your replacement property or properties in writing to your Qualified Intermediary. This is strict and cannot be extended.
- Exchange period: You have 180 calendar days from the transfer date to acquire and close on at least one identified replacement property. This is also strict.
- Tax reporting: You must file IRS Form 8824 for the tax year in which the exchange occurs. Missing either deadline usually means the exchange fails and gains are recognized.
How identification works
You must identify in writing to your Qualified Intermediary using one of these methods:
- Three-property rule: Identify up to three properties of any value.
- 200% rule: Identify any number of properties if their total fair market value does not exceed 200% of the value of the property you sold.
- 95% rule: If you identify more than allowed above, you must acquire at least 95% of the total value of what you identified. Identification must be unambiguous. Make sure addresses, legal descriptions, and unit numbers are precise.
Your Qualified Intermediary’s role
A Qualified Intermediary (QI) prepares exchange documents, holds your sale proceeds, and releases funds to buy the replacement property. You cannot receive or control the proceeds at any time. Choose a QI with strong controls and experience. Ask about professional memberships, errors and omissions insurance, banking arrangements, references, and escrow safeguards. Sign your exchange agreement before or at the closing of your sale.
Step-by-step timeline
Pre-sale planning
- Talk with a CPA or tax attorney to confirm 1031 eligibility, run gain estimates, and plan for mortgage replacement to avoid taxable boot.
- Select a QI and ask for model documents to review. Execute the exchange agreement before your sale closes.
- Coordinate with your lender and title company. Order a preliminary title review and consider ALTA/NSPS survey needs for the properties you may target.
Day 0: Close on the sale
- Your QI must receive the sale proceeds directly at closing. Do not touch the funds.
- The 45-day and 180-day clocks start now.
Days 1–45: Identify in writing
- Identify replacement properties to your QI in writing using the three-property, 200% or 95% rule.
- Start due diligence immediately. Schedule inspections, title commitments, and any surveys for your top choices as soon as possible.
- Secure lender pre-approvals and lock in underwriting timelines. In rural counties, inspections or surveys can take 2 to 6 weeks.
Days 46–180: From contract to closing
- Complete inspections, title review, survey work, and loan underwriting. Clear any title exceptions early.
- Coordinate with the QI and title company to ensure exchange funds flow correctly.
- Aim to close by day 150 to 160 to leave a buffer for delays.
Post-closing
- Gather final closing statements and exchange documents. File Form 8824 with your federal return.
- Keep your exchange agreement, identification notices, and all closing paperwork in your records.
Fremont County specifics to plan for
Key local offices you may interact with
- Fremont County Clerk & Recorder: Recording deeds and confirming recording timelines.
- Fremont County Assessor: Parcel numbers, assessed values, and tax records to verify legal descriptions.
- Fremont County Treasurer: Tax payoff figures, tax proration, and payment deadlines.
- Planning & Zoning / Community Development: Zoning, permitted uses, setbacks, and prior approvals or variances.
- City and town building departments in Cañon City, Florence, and other municipalities: Permit history and code compliance.
- Local title companies, attorneys, and lenders with 1031 experience: Coordinate ALTA surveys, title commitments, and closings.
Inspections and surveys
- Order general property inspections right after identification. For investment properties, consider rental compliance checks and environmental screenings. For rural properties, septic or leach field evaluations and well testing may be prudent.
- Ask the title company if an ALTA/NSPS survey is required or recommended. Rural or acreage parcels often need more time, so order early.
- Request a title commitment early. Work to clear easements, access, or mineral-related exceptions well before day 180.
Rural parcel realities
- Verify water rights, septic systems, and access easements. Confirm any shared or private roads and recorded rights of way.
- Plan for seasonality. Weather or surveyor availability can affect scheduling. Build in buffers.
Recording and closing logistics
- Confirm recording cutoffs and whether e-recording is available. Align your closing timeline so recording occurs within your exchange window.
Practical risk-reducers
- Front-load the schedule: Try to identify within 14 to 21 days and target closing by day 150 to 160.
- Identify multiple options: Use the 200% rule when it makes sense to reduce the risk of a fallen deal.
- Order surveys early: Surveys can be a major source of delay in rural counties.
- Mind the debt: Replace equal or greater value and debt to avoid mortgage boot.
- Choose experienced partners: A seasoned QI, title team, lender, and local attorney can prevent last-minute setbacks.
Seller’s prep checklist
- Confirm 1031 eligibility and run numbers with a CPA or tax attorney.
- Select and engage a Qualified Intermediary; execute the exchange agreement before your sale closes.
- Discuss timing with your lender and title company; request payoffs.
- Order a preliminary title report and consider whether an ALTA survey is needed on the property you are selling.
- Include appropriate exchange language in your sale contract and notify all parties of the QI.
- Map out your 45-day and 180-day deadlines on a shared calendar with your QI.
- During the 45-day window, submit written identification to the QI and immediately schedule inspections and any required environmental or septic/well reports.
- Between day 46 and closing, clear title exceptions, finalize financing, and coordinate funding with the QI and title company.
- At replacement closing, ensure QI funds are disbursed per the exchange agreement and confirm the deed is recorded correctly.
- After closing, compile all documents and file Form 8824 with your return.
Common pitfalls to avoid
- Letting sale proceeds touch your account or your attorney’s trust account. That invalidates the exchange.
- Missing the 45-day identification deadline or identifying properties vaguely.
- Compressing due diligence so tightly that inspections, surveys, or loan underwriting push you past day 180.
- Choosing a QI without strong escrow controls, insurance, or verifiable experience.
- Failing to replace enough value or debt, which can create taxable boot.
State and reporting notes
Colorado often follows federal treatment for 1031 exchanges, but state conformity can change. Confirm the current year’s guidance with a Colorado CPA or the Colorado Department of Revenue. For federal reporting, file Form 8824 and retain your exchange agreement, identification letters, and all closing statements.
When to call a pro
If you want a clean, low-stress exchange, assemble your team early. You will want a Qualified Intermediary, a CPA or tax attorney, and a local title company and lender who know Fremont County processes. If you would like step-by-step guidance on inspections, surveys, and timelines that fit our rural market, reach out to Unknown Company to schedule a consultation.
FAQs
What is a 1031 exchange for Fremont County investors?
- A 1031 exchange lets you defer capital gains taxes when you sell an investment or business-use property and buy like-kind U.S. real property, as long as you meet strict IRS timelines and rules.
What are the 45-day and 180-day 1031 deadlines?
- You must identify replacement properties in writing within 45 days after your sale and close on at least one identified property within 180 days of your sale.
How do I choose a Qualified Intermediary for a 1031 exchange?
- Look for strong escrow controls, errors and omissions insurance, industry membership, proven experience, and clear documentation, and sign the exchange agreement before your sale closes.
What identification methods can I use in a 1031 exchange?
- You can use the three-property rule, the 200% aggregate rule, or the 95% rule, as long as your written identification to the QI is specific and delivered by day 45.
What local due diligence should I prioritize in Fremont County?
- Order inspections and any ALTA/NSPS survey early, verify access and easements, check zoning and permitted uses, and confirm tax and recording details with local offices.
What is “boot” in a 1031 exchange?
- Boot is cash or non-like-kind value you receive in the exchange and can be taxable. Replacing equal or greater value and debt helps minimize this risk.
