Spectrus Real Estate - Replacement Property Identification

During a 1031 Exchange, there are two timelines that are of the uptmost importance. The Identification Period and the Exchange Period.

Identification period: Within 45 days of selling the relinquished property, you must identify suitable replacement properties. The 45-day rule is very strict and is not extended should the 45th day fall on a Saturday, Sunday, or legal holiday. You must comply with at least one of the following identification rules or exceptions when completing the identification of your like-kind replacement properties:

3-property rule

You may identify any three properties as possible replacements for your  relinquished property. More than 95% of exchanges use the 3-property rule.      

200% rule

You may identify any number of properties as possible replacements for  your relinquished property as long as the aggregate value of those properties  does not exceed 200% of the value of your relinquished property.      

95% exemption

You may identify any number of properties as possible replacements for  your relinquished property as long as you end up purchasing at least 95% of the  aggregate value of all properties identified.

The other timeline is the exchange period. During this time the replacement property must be received by the taxpayer within the exchange period, which ends within the earlier of 180 days after the date on which the taxpayer transfers the property relinquished, or the due date for the taxpayer tax return for the taxable year in which the transfer of relinquished property occurs. The 180-day rule is very strict and is not extended should the 180th day fall on a Saturday, Sunday, or legal holiday.

Click on the underlined text to find ore information about replacement property and/or 1031 exchange property