1031... Please help

[John Arnold]

I am closing on the sale of a rental that is going to profit 100K, so I have about 125K check that is coming to me later this week!!  What should I do If I don't have a property identified at this time to reinvest.  I think I read that the money needs to NOT be in my custody!!??  What do I do with it then?  Any suggestions as to where I can "invest" it, if even for a short time.  Located in Northern Ohio.

[Dave Foster]

@John Arnold, As mentioned above you need to get this set up before your closing.  However, there is a hidden benefit for you even if you don't find a replacement property.   Since your sale is happening so late in 2021, your 45 day period will not end until 2022.  Since the Qi has to hold the funds for 45 days that means you will not have access to the money until 2022 at the soonest.  

So if you do not find a property you want, then don't turn in a 45 day list.  Your exchange will die and you will get your funds with the profit taxable.  But because you received it in 2022 your account can file the transaction as an installment sale with proceeds received in 2022 and you won't have to pay the tax until April of 2023.

That's not a bad fall back position