More about identification

Additional Identification Information

At this point you probably realize that the most difficult part of any 1031 exchange is locating, securing and identifying your candidate or target properties. This is because the 45 day time period moves quickly and often it is just difficult to locate a property or properties which will fit your need. So, let's cover the aspects of property identification which are important for you to remember.

First, you must identify within 45 days of the closing of your exchange or Relinquished Property
Your identification must be in writing and submitted in a timely manner
Most Exchangers identify to their facilitator, but it is possible to identify to an appropriate third party and the rules for those parties are listed elsewhere under identification rules
When you identify you must use one of two identification rules or one exception
The first rule is the three property rule in which you can identify up to three properties of any value
The second rule is the 200 percent rule. You can identify more than three, but the total aggregate value of the property you identify cannot exceed 200 percent of the property you sold
The exception is known as the 95 percent exception. Meaning, you can identify more than three properties, and properties valued at more than 200 percent of the property you sold, but when you do, you must acquire at least 95 percent of the total value of property identified. So it might as well be the 100 percent exception, correct?
Whatever property you acquire must be a property that you previously identified
If you fail to identify within 45 days, your exchange proceeds will be returned to you on the 46th day
If you identify within the 45 days period, but fail to acquire a Replacement Property, your exchange funds will be returned to you after your 180th day
If you are still within your 45 day identification period, you can revoke a previous identification and re-identify new property