The identification letter is the single document that determines what an exchanger is legally allowed to close on, and it is due 45 days after the relinquished property closes regardless of how the search is going. Building that list well, rather than scrambling to fill it, is the difference between a controlled exchange and one that ends with a forced purchase of whatever happened to still be under contract.
Starting the Search Before the Clock Starts
The 45-day identification window begins on the closing date of the relinquished property, not on the day the exchanger starts thinking seriously about replacements. Waiting until after closing to start evaluating candidates compresses an already tight window into something closer to two or three weeks of real working time once diligence, scheduling, and document turnaround are accounted for.
We start building a candidate list the moment a relinquished Atlanta property goes under contract, so the exchanger has already screened several options by the time the identification clock legally begins.
Choosing Between the Three-Property Rule and the 200% Rule
Exchangers can identify up to three properties of any value under the three-property rule, or more than three properties as long as their combined fair market value does not exceed 200% of the relinquished property's sale price. The right choice depends on how confident the exchanger is in a small set of strong candidates versus wanting a broader list as insurance against a deal falling through.
A narrow three-property list only works if each property is genuinely closeable, which means real availability, workable financing, and no known title or diligence issue. A broader 200% list trades that precision for coverage, and either approach can fail if it is built without discipline.
What a Defensible Identification List Requires
Every identification letter we help build satisfies the same practical requirements before it goes out.
- unambiguous legal description or street address for each named property
- written delivery to the qualified intermediary within the 45-day window
- confirmation that combined value complies with whichever identification rule applies
- a documented reason each property was selected, retained for the exchanger's records
- a realistic closing path for every named property, rather than availability at the time of naming alone
The 95% Rule and When It Actually Applies
Exchangers who identify more properties than the three-property or 200% rules allow can still qualify if they end up acquiring at least 95% of the fair market value of everything identified. In practice this rule is rarely the intended strategy and more often a safety net explained after an exchanger has already over-identified.
We build the list to fit inside the three-property or 200% limits from the start whenever possible, because relying on the 95% rule as a backstop puts the entire exchange at risk if the acquisition value comes in short.
What a Rushed Identification List Costs an Investor
The exchangers who end up disappointed with their replacement property are frequently the ones who built their identification list under deadline pressure, naming whatever was available on day forty-four rather than what actually fit their investment goals. A list built early, with real diligence behind each name, protects the exchanger from that outcome.
Documenting Why Each Property Was Named
A written rationale for each identified property, even a short one, protects the exchanger if a question ever arises about whether the list was assembled in good faith or as an afterthought. We keep this documentation as part of the working file rather than treating identification as a single letter with no supporting record behind it.
That rationale also becomes useful later, since an exchanger revisiting why a particular Atlanta property was chosen over another candidate benefits from a written record rather than relying on memory of a decision made under deadline pressure months earlier. It also gives the exchanger's tax advisor helpful context if a question about the exchange ever surfaces well after closing, when the specifics of a fast-moving search have otherwise faded.
Common 1031 Exchange Questions
When does the 45-day identification period actually start?
It starts on the closing date of the relinquished property, and it runs on calendar days including weekends and holidays, so the deadline does not move based on how the search is progressing.
Can I change my identification list after it has been submitted to the QI?
Generally no once the 45-day window closes, which is why the list needs to reflect genuinely vetted candidates rather than placeholders the exchanger intended to replace later.
What is the difference between the three-property rule and the 200% rule?
The three-property rule allows naming up to three properties regardless of value, while the 200% rule allows naming more than three as long as their combined value does not exceed twice the relinquished property's sale price.
Is it better to identify one strong property or several backup candidates?
It depends on confidence level. A single strong candidate with a clear closing path can work, but most exchangers benefit from at least one genuine backup in case financing, title, or seller issues delay the primary choice, since replacing a name after the window closes is rarely an option worth counting on.
What happens if none of my identified properties close by the 180-day deadline?
The exchange fails and the transaction is treated as a taxable sale, which is why every named property needs a realistic closing path, rather than theoretical availability alone, at the time of identification.
