A delayed exchange (also referred to as a deferred or "Starker" exchange, Starker v. U.S. 602 F.2d 1341) may be necessary when you have not yet determined your needs for replacement property and seek a delay in determining what property to accept in exchange; if you find a customer who wants your property but who has not yet acquired property to turn over to you in exchange; or when you find a property that you want, but have not yet found property the other person will be willing to accept in exchange.
Under the like-kind exchange rules (see Treas. Regs. §1.1031(k)-1(b)(e)), you can structure a deferred (non-simultaneous) exchange. You transfer your property to the other party but defer your receipt of replacement property. To qualify, the following time limits must be met:
It pays to be particularly careful with this second requirement. If you transfer your property in the exchange late in the year, you should not automatically assume that you have 180 days to receive the replacement property. If, for instance, you transfer your property on December 10th, and you don't get an extension for filing your tax return, you will have to receive the replacement property in exchange by April 15th, which is earlier than the date which is 180 days after December 10th. Of course, in this case, a filing extension will give you additional time. Note, however, that no extensions can be obtained on the 45- or 180-day periods themselves.
If the time limits outlined above are too restrictive in your case, we may be able to work out alternative arrangements which effectively give the exchanging party more time to come up with the replacement property. These arrangements can involve:
A final possibility is a special transaction that the IRS recognizes, called a qualified exchange accommodation arrangement. If you follow to the letter the rules the IRS has set out, you can arrange to have the property you want to acquire transferred to an accommodation party until the property you will relinquish has been identified. The transaction reverses the timing rule mentioned above by requiring you to identify the property you intend to exchange, rather than the property you plan to receive in the exchange, within 45 days of the date that the replacement property is transferred to the accommodation party. Please note, this special transaction must be accomplished in exactly the way IRS requires in order for you to qualify for the favorable tax treatment.