Constructive Receipt
If you have the right to control or access the sale proceeds, the IRS taxes them — even if you never spend them.
Definition
Constructive receipt means you are treated as having received money if it is credited to you, set aside for you, or otherwise available for you to draw on — even if you never actually touch it. In a 1031 this is fatal: the whole point of a qualified intermediary is that the proceeds are held where you cannot access or control them, so you avoid constructive receipt until the exchange completes.
Why it matters
It is why you cannot have the closing wire the money to your own bank account "just for a few days." The moment you can access it, the deferral is gone. The QI’s escrow structure exists to prevent exactly this.
Related terms
General education — not tax or legal advice. This explains how §1031 exchanges work in general terms and uses simplified assumptions. Rules and tax rates change and your situation is specific. Talk to a qualified CPA or tax attorney before you rely on any of it. See our full terms & legal notice.