1031 Exchanges for Nebraska & Minnesota Farmland (2025): 45/180-Day Deadlines, Identification Rules & Ag Pitfalls

Sep 17

4 min read

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“1031 exchange for farmland—relinquished vs. replacement fields with arrows, 45-day identification and 180-day deadline, checklist for 3-property/200%/95% rules, and Qualified Intermediary escrow. — 1031 exchange: 45/180-day clocks, ID rules, QI escrow.

Answer in 30 seconds

A 1031 like-kind exchange lets you defer capital gains tax by selling investment farmland and buying replacement U.S. real property.
You have 45 days from the sale to identify replacement property (in writing), and 180 days to close—or by your tax-return due date including extensions, whichever comes first.
Use a Qualified Intermediary (QI); don’t touch the sale proceeds (no constructive receipt).
Identification must follow the 3-property, 200%, or 95% rule—pick one and comply strictly.
Match title & taxpayer (same seller → buyer), avoid boot (cash or debt relief), watch related-party rules, and plan for entities (TIC vs. LLC) to avoid disqualifying partnership interests.

Quick Introduction

Selling or consolidating farmland in Nebraska or Minnesota? A 1031 exchange can keep more working capital in your operation—if you nail the timelines, identification rules, and paperwork. This post explains the 45/180-day clocks, how to pick and identify replacement parcels, the 3/200%/95% tests, and the ag-specific pitfalls that trip up exchanges (entities, improvements, debt, and related parties). Use the checklists to keep closings on track.

Identification rules at a glance (quick compare)

Rule	How it works	Best use case	Key risk
3-Property Rule	Identify up to 3 properties—buy any or all.	High-value farms or when you want options.	You only get 3 shots—choose carefully.
200% Rule	Identify any number of properties as long as total FMV ≤ 200% of what you sold.	Many smaller parcels or multiple counties.	Appraisal/valuation drift can blow the cap.
95% Rule	Identify any number/amounts—but you must close 95% of identified value.	Portfolio roll-ups with near-certain closings.	One failed closing can sink the whole ID list.

The 45/180-day clocks (don’t mix them up)

Day 0: You transfer (close) the relinquished farm.
By Day 45: Identify replacement property(ies) in a signed, written list delivered to the QI or other permitted party.
By Day 180: Acquire the replacement property(ies). If Day 180 lands after your return due date, file an extension to preserve the full 180 days.
No extensions for weekends/holidays; plan closings accordingly.

Ag-specific pitfalls (and how to avoid them)

Entity mismatch (“drop & swap”). 1031 applies to the same taxpayer—LLC membership interests are not like-kind. If partners want to split, plan well before marketing.
Boot (cash or debt). Taking cash out or reducing debt without replacement debt creates taxable boot. Match or increase net equity and debt on the buy.
Improvements & construction. “Build-to-suit” or improvement exchanges require special structures; you can’t count improvements finished after Day 180.
Related parties. Buying from/selling to related parties has two-year holding traps; get tax counsel before attempting.
Personal property. Post-TCJA, only real property qualifies—no equipment or grain.
Primary home on the farm. Allocate residence vs. ag land; only the investment/business portion can be exchanged.
Perimeter deals (water/CRP/leases). Ensure the replacement parcel use is for investment or business; align leases, CRP, and water rights with the new ownership.

Exchange timeline checklist (use at listing and contract)

Before listing

☐ Meet with QI + CPA + attorney; pick exchange structure (delayed/reverse/improvement).
☐ Confirm title/taxpayer name (individual, trust, or TIC)—avoid partnership-interest issues.
☐ Line up candidate replacement farms early; gather legal descriptions.

At purchase agreement (sell side)

☐ Add exchange cooperation language.
☐ Open QI exchange agreement; set up escrow instructions.
☐ Calendar Day 45 and Day 180 (and tax-return extension date).

Between closings

☐ Send written identification to the QI by Day 45 (address/legal, % interest).
☐ Confirm which ID rule you’re using (3/200%/95%).
☐ Track equity and debt to avoid boot; line up lender term sheets.

Replacement closing

☐ Assign purchase contract to QI; QI wires funds—you don’t touch proceeds.
☐ Verify deed grantee name matches seller/taxpayer.
☐ Collect closing statement(s) showing full exchange consideration.

Mini-FAQ

Is farmland like-kind to other farmland?

Yes. U.S. real property held for investment or business is generally like-kind to other U.S. real property (farmland to farmland, or farmland to other real estate).

Can I exchange Nebraska farmland for Minnesota farmland (or vice versa)?

Yes—both are U.S. real property. Cross-state is fine; international property is not like-kind with U.S. property.

Can I 1031 my house or equipment?

No. Primary residences and personal property (tractors, combines) are not eligible. Only real property qualifies.

What if my buyer needs me to close before I find a replacement?

Consider a reverse exchange (buy first, sell later) using an exchange accommodation titleholder (EAT). More complex—start early.

How do I avoid tax if I need some cash for improvements?

If you take cash out at closing, it’s boot (taxable). Use an improvement exchange structure so QI-controlled funds pay for improvements before Day 180.

Bottom line / Next step

A 1031 can supercharge a farm succession or consolidation—if you run a tight process: QI in place, 45/180 dates calendared, clean identification, and matching equity/debt. We coordinate with your QI, lender, and title to keep both closings compliant and on time. Book a session to map your exchange and avoid a costly boot.