The 45-Day Identification Period

Day one is the closing date of the relinquished property, and day 45 lands exactly 45 calendar days later, with no adjustment for a Saturday, a federal holiday, or a hurricane evacuation order. Treasury regulations under Section 1031 give no extension mechanism for the identification period on their own; the only relief comes from a formal IRS disaster declaration covering the taxpayer's county or parish, and even that relief is announced after the fact, not something an investor can count on while planning a sale.

Because the deadline is fixed and unforgiving, most experienced 1031 investors start scouting replacement candidates before the relinquished property even goes under contract, so the 45-day window is spent confirming a shortlist rather than starting one from nothing.

Under the three-property rule, an investor may identify up to three replacement properties of any value, with no cap on total price. This is the rule most single-property exchanges use, since a New Orleans investor trading one Uptown fourplex for one replacement building rarely needs more than a primary candidate and two backups.

The 200% rule allows an unlimited number of identified properties, as long as their combined fair market value does not exceed 200% of what the relinquished property sold for. An investor exchanging out of a Central Business District office building worth 3 million dollars could identify five or six smaller replacement candidates across Jefferson and St. Tammany Parish, as long as the combined value stays under 6 million. This rule tends to fit investors diversifying out of one large asset into several smaller ones.

The 95% rule removes both the count limit and the 200% value cap, but it comes with a strict condition: the investor must actually acquire at least 95% of the aggregate value of everything identified. Miss that threshold, even by a small margin, and the exchange fails entirely, not just the properties that did not close. Because of that all-or-nothing exposure, the 95% rule is rarely used on purpose and shows up more often as a trap for an investor who identified too many properties under the mistaken belief the 200% rule would cover them.

Picking a rule after the identification list already exists tends to produce a list built around wishful thinking rather than a filed strategy. Settling the rule first, then drafting the list to fit it, keeps the qualified intermediary submission clean and avoids an accidental slide into the 95% rule's all-or-nothing exposure. A written identification also has to name each property unambiguously, typically a street address or the legal description used on prior recorded documents, delivered to the qualified intermediary before midnight on day 45.

Revoking and replacing an identification is allowed at any point before day 45 closes, and investors who receive a better offer on a fourth candidate late in the window sometimes swap it in for a weaker one on the original list rather than trying to add it as a fourth property, which could push the identification outside the three-property rule and into 200% territory without anyone intending it.

Nothing in Section 1031 requires the replacement property to sit anywhere near the relinquished property, and Southeast Louisiana investors regularly identify across Orleans, Jefferson, St. Tammany, and St. Bernard Parish inside the same list. A single-family rental sold in Chalmette can be exchanged into a commercial building in Covington, or a Marrero fourplex can be replaced with an industrial parcel along the river corridor, as long as each candidate is properly described and the identification rule chosen still fits the combined value of the list.