The replacement property is properly identified only if in writing and delivered to the QI by the end of the 45th day with the taxpayer's signature. The replacement property must be identified with specificity, either by address, tax map and parcel number, unit number, etc.

You may identify more than one property as replacement, but you must comply with one of the following three rules:

  1. You may identify up to three properties with any value to replace your relinquished property.
  2. Or, you may identify more than three properties as possible replacements for your property as long as the aggregate value of those replacements does not exceed 200% of the value of your relinquished property. For example, if you have an apartment building for sale, and its value is $200,000, you can identify any number (over three) of replacement properties with a combined value of $400,000, regardless of any debt you may have on the apartment building.
  3. Or, you may identify any number of properties as long as you end up purchasing at least 95% of the aggregate value of all properties identified, (we have never had a client use this rule).

Independent Trustees can supply you with a sample identification letter.


NOTE: The content of this website is informational only. It does not constitute tax, legal or accounting advice. Each situation is different and you are advised to seek appropriate professional advice to see if a 1031 Exchange meets your needs.