1031 Exchange 45-Day Identification Rules: How the 3-Property and 200% Limits Actually Work.

An investor closes the sale of a rental duplex on August 3, 2026. The proceeds go straight to a qualified intermediary and she starts shopping for the replacement. What nobody explained at the closing table is that the 1031 exchange 45-day identification rules give her until midnight on September 17, 2026 to name her candidate properties in a signed letter, and that the list is binding in ways sellers rarely expect. Name too few and one dead deal kills the exchange. Name too many and the IRS treats her as having named nothing at all.

The identification period starts on the date you transfer the relinquished property and ends at midnight on the 45th day after, under Treas. Reg. §1.1031(k)-1(b)(2). Calendar days, not business days. For the August 3, 2026 closing above, day 45 is September 17, 2026, and an identification letter sent September 18 is worthless.

The exchange period runs in parallel. Under IRC §1031(a)(3), you must receive the replacement property by the earlier of 180 days after the sale or the due date, including extensions, of your return for the year of the sale. The second half of that sentence is the trap. A 2026 calendar-year filer's return is due April 15, 2027, and a sale that closes on or after October 18, 2026 puts day 180 past that due date. Close in late October or later and you must file Form 4868 to keep the full 180 days; file your return in February instead and you cut your own exchange period short. Both dates get reported to the IRS on Form 8824. And if the exchange fails at either deadline, the gain is taxable in the year of the sale, though a qualified opportunity fund can still defer it, since that rollover has its own 180-day window and only requires reinvesting the gain.

Treas. Reg. §1.1031(k)-1(c)(4) gives you two ways to build the list and one escape hatch. The 3-property rule, in §1.1031(k)-1(c)(4)(i), lets you identify up to three properties with no regard to their value. Sell an $800,000 duplex and name three $2 million buildings if you like. Most exchangers use this rule, and they name a second and third property purely as backups in case the first deal dies during the exchange period.

The 200% rule, in §1.1031(k)-1(c)(4)(ii), applies when you want more than three candidates. You may name any number of properties as long as their combined fair market value, measured at the end of the identification period, does not exceed 200% of what you sold. The math runs on gross value, not your equity or the price you expect to negotiate.

Exceed three properties and the 200% cap at the same time, and the regulation treats you as if you identified nothing. Two exceptions save an overloaded list. Any property you actually receive within the 45 days counts as identified under §1.1031(k)-1(c)(1). And under the 95% exception, an oversized list still works if, by the end of the exchange period, you acquire identified properties worth at least 95% of the total value of everything on the list. Acquiring 95% of a five-property list is close to acquiring all of it, which is why the 95% rule is a last resort rather than a plan.

The identification must be a written document, signed by you, and hand delivered, mailed, faxed, or otherwise sent before the end of the 45 days, under Treas. Reg. §1.1031(k)-1(c)(2). It goes either to the person obligated to transfer the replacement property to you, usually the seller, or to another party to the exchange who is not a disqualified person. In practice that means your qualified intermediary. Your own attorney, CPA, or real estate agent is a disqualified person under §1.1031(k)-1(k), so a memo in your agent's file does not identify anything. The IRS walks through the same requirements in Fact Sheet FS-2008-18.

Each property must be described unambiguously. Under §1.1031(k)-1(c)(3), a legal description, a street address, or a distinguishable name such as the Mayfair Apartment Building all work. A fourplex somewhere in Boise does not. You can change your mind inside the window: §1.1031(k)-1(c)(6) lets you revoke an identification with another signed written document delivered to the same person before day 45. After midnight on day 45 the list is locked, and the property you ultimately receive must be substantially the same property you identified. Since the Tax Cuts and Jobs Act, §1031 covers real property only, so the list is buildings and land, not equipment. If you eventually move into the replacement property, a separate five-year rule under §121(d)(10) limits the home-sale exclusion on the way out.

There is no weekend or holiday relief. If day 45 lands on a Sunday, your letter is due Sunday. The one real exception is a federally declared disaster. Section 17 of Rev. Proc. 2018-58 extends both the 45-day and 180-day deadlines, for exchanges already underway when the disaster hits, by the later of 120 days or the end of the relief period the IRS announces for that disaster, capped at one year and at the due date, with extensions, of your return for the year of the sale. That relief has covered hurricanes and wildfires, not cold feet or slow lenders.