The IRS requires that you identify any potential Replacement Property that you expect to acquire in your 1031 exchange and any property you acquire has to have been previosuly identified.
Your identification must be in writing, submitted in a timely manner and you must identify using 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.
Lastly, if you are still within your 45 day identification period, you can revoke a previous identification and re-identify new property