Updated August 17, 2026
Most sellers know they have 45 days to identify replacement property. Far fewer know that how many properties they may identify is governed by three separate rules, that choosing the wrong one can invalidate the whole exchange, and that the identification has to be written, signed and delivered in a specific way. This is the part of a 1031 exchange where a deferral is most often lost on a technicality rather than on a bad decision.
The identification period runs 45 calendar days from the closing of the relinquished property. Calendar days — weekends and holidays included. It does not extend for a slow market, an unresponsive seller, or a holiday period.
Which is why the replacement search should begin before your building is even listed. A seller who starts looking after closing has already spent the most useful part of the window.
You may identify replacement property under whichever of these you can meet.
Identify up to three properties, regardless of their value. You may then acquire any one, two, or all three.
This is the rule most exchanges use, and for good reason: it is simple, it carries no valuation test, and three candidates is usually enough to survive one falling through. If you can work within it, work within it.
Identify any number of properties, provided their combined fair market value does not exceed 200% of the value of the property you sold.
Sold a building for $6 million? You may identify as many properties as you like, so long as their aggregate value stays at or under $12 million. Useful when you are assembling several smaller replacements, or when you want more than three candidates because the market is competitive.
Identify any number of properties at any value — but you must actually acquire at least 95% of the total value you identified.
This is the escape hatch, and it is a dangerous one. If you identify $20 million across six properties and close on $18 million of it, you have acquired 90% and the exchange fails. In practice this rule is used rarely and only where the acquisitions are close to certain.
The rules are unforgiving about form, and this is where avoidable failures happen.
In writing. Not a phone call, not an email to your broker, not an understanding.
Signed by you, the taxpayer completing the exchange.
Delivered by midnight on day 45 to your qualified intermediary — or to another person who is a party to the exchange, such as the seller of the replacement property. Delivering it to your own attorney or accountant does not count, because they are not parties to the exchange.
Unambiguously described. A street address and legal description. "A four-plex in Reseda" is not an identification. Where you are buying a percentage interest, state the percentage.
Revocable, but only within the window. You may revoke and re-identify as many times as you like before day 45 — in writing, same delivery requirements. After day 45 the list is fixed, permanently.
Identifying only one property. Perfectly legal and extremely fragile. If that deal dies on day 60, there is nothing to fall back on and the exchange fails. Use all three slots.
Vague identification. A description that could plausibly refer to more than one property is not an identification.
Late delivery. Day 46 is not day 45. There is no grace period, no reasonable-cause exception, and the IRS has been consistent about that.
Miscounting the aggregate under the 200% rule. Sellers identify four or five properties and quietly exceed 200% of the relinquished value without recalculating.
Assuming the QI will chase you. A good intermediary will remind you. The obligation is still yours.
Identifying property you have not seen or underwritten. The 45-day clock creates pressure to list something. A property identified without diligence frequently becomes a property bought badly — which is how a tax deferral turns into a decade of owning the wrong building.
Start the search before you list. This single habit resolves most identification problems. Every seller I have watched exchange well had a replacement thesis formed while their building was still being marketed.
Aim to identify all three slots under the Three-Property Rule, with a genuine first choice and two real fallbacks — not two placeholders.
Get the identification drafted early and hold it, rather than composing it at day 43.
Deliver it with time to spare and keep proof of delivery.
Have your CPA confirm the value arithmetic if you are relying on the 200% rule.
Identification is one of two deadlines, and they run concurrently rather than consecutively. You have 45 days to identify and 180 days from the same closing to complete the acquisition — not 180 days after identification. The 180 days can also be cut short by your tax return due date for the year of the sale, so a late-year closing needs an extension filed to preserve the full period.
None of that changes if your first-choice property falls through on day 100. You are limited to what is on the list.
Can I change my identification after day 45?
No. Before day 45 you may revoke and re-identify freely in writing. After it, the list is fixed. This is the single most consequential deadline in the process.
Do I have to buy everything I identify?
Under the Three-Property and 200% rules, no — you may acquire one, some or all. Under the 95% rule you must acquire at least 95% of the identified value, which is why it is used so rarely.
What counts as delivery to a party to the exchange?
Your qualified intermediary is the usual and safest recipient. The seller of a replacement property also qualifies. Your own attorney, accountant or real estate agent generally does not, because they are your agents rather than parties to the exchange.
Can I identify a property I have not yet negotiated?
Yes, and buyers do. But identifying something you have not underwritten is how sellers end up owning a building they did not want. The rules permit it; judgment should not.
What happens if I miss day 45?
The exchange fails and the sale becomes taxable in the year it closed. There is no extension for identification.
The identification rules are not difficult. They are unforgiving, which is different. Use the Three-Property Rule unless you have a specific reason not to, fill all three slots with real candidates, get the document written and delivered early, and start the search before your building is listed rather than after it closes. Almost every failed identification I have seen came from starting late, not from misreading a rule.
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