1031 Exchange Identification Rules: 45-Day Window, Three-Property and 200% Rule

The 1031 exchange identification rules say that by midnight on day 45 after you sell, you must hand a signed, specific written list of replacement properties to a permitted person, and that list must fit one of three limits: up to three properties of any value, any number worth no more than 200% of what you sold, or the 95% exception. Miss the deadline or break all three limits and the exchange fails, with the full gain taxable.

I’m assuming you already know what a 1031 exchange is. If not, start with the 1031 exchange rules guide and come back. This post is only about the identification step, the part of the process that wrecks more otherwise-sound exchanges than financing or pricing does. This is general information as of November 2026, not tax advice, and the regulation text itself is the authority: Treas. Reg. 1.1031(k)-1 on eCFR.

What are the 1031 exchange identification rules?

Section 1031(a)(3) of the Internal Revenue Code sets two clocks that start when you transfer the relinquished property: 45 days to identify, and 180 days (or your tax return due date including extensions, if earlier) to close. You can read the statute at 26 U.S.C. 1031 on Cornell LII. The regulation then fills in how identification works.

Think of identification as the moment you narrow the field. Before day 45 you can shop. After day 45 you can only buy from the list you handed over. Three questions decide whether you pass:

• Did the notice arrive on time?
• Was the notice in a valid form and in the right hands?
• Does the list fit one of the three quantity tests?

All three must be yes. Getting two out of three is the same as getting zero.

Requirement	What the rule says	Where people slip
Timing	Within 45 calendar days of transfer of the relinquished property	Counting from the contract date instead of the closing date
Form	Written, signed by you	Phone calls and verbal promises
Description	Unambiguous: legal description, street address or a distinguishing name	”A fourplex in Phoenix”
Recipient	Person obligated to transfer the property, or another person involved who is not a disqualified person	Sending it to your own broker or CPA only
Quantity	Three-property, 200% or 95% test	Eight properties on a $500,000 sale

When do the 45 days start and end?

The clock starts when you transfer the relinquished property, which in a normal sale is the closing date. The day after closing is day one. Day 45 ends at midnight. The regulation counts calendar days, and it contains no rule that pushes a deadline falling on a weekend or federal holiday to the next business day. I have seen investors assume it works like a court filing deadline. It does not.

Here is a worked timeline, labeled hypothetical, for a sale closing on Thursday, November 12, 2026.

Milestone	Date	Note
Relinquished property closes	Thu, Nov 12, 2026	Day 0
Day 1	Fri, Nov 13, 2026	First day counted
Day 45, identification deadline	Sun, Dec 27, 2026	Midnight; no weekend extension
Practical delivery target	Wed, Dec 23, 2026	Leaves a buffer around the holidays
Day 180	Tue, May 11, 2027	Not the real deadline here
2026 tax return due date	Thu, Apr 15, 2027	Earlier than day 180 unless you extend

That last row catches people. The 180-day period ends on the earlier of day 180 or the due date, including extensions, of the return for the year of the sale. A November closer who files on time without an extension would have until April 15, 2027, not May 11. Filing Form 4868 for an extension preserves the full 180 days. Ask your CPA early.

If you are selling several relinquished properties in one exchange, the periods run from the transfer of the first one. If a federally declared disaster hits your area, the IRS sometimes extends deadlines for affected taxpayers, so check IRS disaster relief announcements if that applies to you.

What counts as a valid written identification?

A valid identification is a written document, signed by you, that clearly describes the replacement property, and that you send to the right person before the deadline. Four elements matter.

Signed. The taxpayer signs. If the relinquished property is owned by an LLC, the person signing needs authority for that LLC. A signed PDF is a common way to do it; follow your intermediary’s procedure.

Unambiguous description. For real estate the regulation accepts a legal description, a street address, or a distinguishing name such as “the Maple Court Apartments.” Use the street address and the parcel number together if you can. For a property still to be built, you describe as much as is practicable at the time, including the land and the planned improvements.

Delivered to a permitted person. The recipient is the person obligated to transfer the replacement property to you, such as the seller, or any other person involved in the exchange who is not you and not a disqualified person. The qualified intermediary is the standard choice, which is why most exchange agreements say to send it there. Disqualified persons include your agent at any time in the prior two years, which generally covers your attorney, accountant, real estate broker and investment banker, and certain relatives or entities you control. Sending the notice only to your CPA does nothing.

Sent in a way you can prove. The regulation allows hand delivery, mail, fax or other transmission. Whatever you use, keep proof of the time it went out and the time it arrived. A confirmed email to the intermediary’s designated address, followed by a call to confirm receipt, beats a mailed letter dated day 44.

A short form works fine:

1. Your name and the exchange reference number.
2. The date of the relinquished property closing.
3. A numbered list of replacement properties with full address and, where available, parcel number.
4. Your signature and the date.

How does the three-property rule work?

Under the three-property rule, you may identify up to three properties, and their market values do not matter. You do not have to buy all three; you can buy one, two or three of them. This is the default for most investors because it is clean and requires no valuation math.

Its main trap is the fourth property. People add a “just in case” fourth listing, and unless the list also fits the 200% test, that single line item can sink the whole identification. If you want a backup, ask yourself whether three is truly not enough before you reach for a fourth.

For a strategy with several buyers in a competitive market, the common approach is to list a first choice, a close second and a lower-priced fallback, and then stop. Sellers back out and inspections go badly, and the rule gives you room for exactly that.

How does the 200% rule work?

The 200% rule lets you identify any number of properties as long as their combined fair market value is no more than 200% of the fair market value of the relinquished property. It is built for investors who want a wide field, such as a portfolio of smaller properties replacing one large one.

Hypothetical example: you sell for $800,000, so the cap is $1.6 million. You can list four properties priced $500,000, $500,000, $400,000 and $150,000, which total $1.55 million. That passes. List a fifth at $100,000 and the total of $1.65 million fails.

The math uses fair market value of the replacement properties, and valuation questions are where arguments start. A listing price is not always fair market value. If you are within a few percent of the cap, assume the margin is too thin and trim the list.

What is the 95% exception?

The 95% exception rescues an identification that breaks both earlier tests, but only if you then actually acquire replacement property worth at least 95% of the aggregate fair market value of everything you identified. Spread across many properties, that means buying nearly all of them. It is a safety net for someone who identified too much and still closed on all of it, not a strategy for a wide list.

How do the three tests compare in a worked example?

This table is entirely hypothetical. The relinquished property sells for $800,000, so the 200% cap is $1.6 million.

Scenario	Properties identified	Combined value	Three-property test	200% test	95% needed	Outcome
A	3 ($600k, $700k, $1.5M)	$2.8M	Pass	n/a	n/a	Valid
B	4 ($500k, $500k, $400k, $150k)	$1.55M	Fail	Pass	n/a	Valid
C	4 ($700k, $600k, $500k, $400k)	$2.2M	Fail	Fail	$2.09M of $2.2M	Valid only if you buy about 95%
D	5 ($400k, $350k, $350k, $300k, $300k)	$1.7M	Fail	Fail	$1.615M of $1.7M	Valid only if you buy about 95%

Scenario A is the surprise for many investors: the three-property rule has no dollar ceiling, so a $2.8 million list is fine on an $800,000 sale. Your financing, not the identification rule, limits what you can actually buy, and remember that to defer all gain you generally need to buy equal or greater value and replace the debt. The tax consequences of falling short are covered in the post on boot and taxable gain in a 1031 exchange.

Can I change my mind after I identify?

Yes, but only inside the window. You may revoke an identification or replace it with a new list by delivering a signed written revocation to the same person who received the original, before the 45th day ends. After the deadline the list is locked. You can still buy a property that you received within the 45 days even if it was not on any list, because property actually received before the end of the identification period counts as identified.

Practically, treat each amendment as a new filing: date it, number it (“Amended Identification No. 2, superseding all prior lists”), and get written confirmation from the intermediary that the earlier list is withdrawn. Two conflicting lists in a file invite an argument at audit.

How do DSTs, TICs and reverse exchanges fit in?

A Delaware statutory trust interest is treated as an interest in real property for this purpose, and sponsors typically provide an identification-ready description of the specific offering. Name the exact DST, not the sponsor, and watch the sponsor’s closing cutoff, which is often earlier than your day 45. See the DST 1031 exchange guide for how these offerings work. Tenant-in-common interests are described the same way, by property and percentage interest. How several fractional interests count toward the three-property and 200% limits is a question for counsel, since the counting depends on how the interests are structured.

Reverse exchanges flip the order: an exchange accommodation titleholder takes title first, under the safe harbor in Rev. Proc. 2000-37, and you must identify the relinquished property within 45 days after the parking arrangement begins and complete within 180 days. The deadline is the same shape, and the same writing requirements apply. For cost and mechanics, see the reverse 1031 exchange guide.

What mistakes cost investors the most?

One composite case, labeled as such: an investor sells a rental, lines up a seller, and sends an email to her broker saying “I’m going with the duplex on Elm Street.” She never signs a notice and never sends anything to the intermediary. The deal falls through on day 40, and the backup property is only mentioned in a text message. At day 46 she has no valid identification. The exchange fails and the gain, including depreciation recapture taxed at up to 25%, is due. The depreciation recapture post shows how large that bill can be.

The most common errors, in the order I see them:

• Naming too many properties without checking the 200% math.
• Vague descriptions like “a duplex in Denver” or a street name without a number.
• Wrong recipient, such as your own broker, attorney or CPA only.
• Counting from the wrong date, such as the contract date or the date the intermediary received funds.
• Counting day 45 as a business day and planning to send the notice Monday after a Sunday deadline.
• Unsigned or partially signed notices, especially with multiple owners.
• Relying on a seller who backs out with no backup and no time left.

A simple discipline helps: set an internal deadline five business days before day 45, send the notice then, and get written confirmation of receipt. You can still amend until day 45 if something changes.

What should I do this week?

Pull your closing statement and mark the transfer date. Count 45 calendar days and put both that date and your internal date in your calendar. Ask your qualified intermediary for its identification form, the accepted delivery methods and the receiving address, and read how it handles confirmations. Compare fees and services using the qualified intermediary fee guide. If you are deferring a large gain, spend an hour with a tax attorney or CPA who does exchanges before you sign anything. For the broader picture of why investors do this at all, the 1031 tax deferral overview is the place to start.

This article is general information about U.S. federal tax rules as of November 2026 and is not tax or legal advice. Examples are hypothetical. Rules, IRS guidance and your facts can change the result, so confirm with a qualified intermediary and a tax professional before acting.