REPLACEMENT PROPERTY IDENTIFICATION
So let's recap identification a little bit, shall we?
- First, you must identify within 45 days of the closing of your exchange or Relinquished Property
- Your identification must be in writing and submitted in a timely manner
- Most Exchangers identify to their facilitator, but it is possible to identify to an appropriate third party and the rules for those parties are listed elsewhere under identification rules
- When you identify you must use one of two identification rules or one exception
- The first rule is the three property rule in which you can identify up to three properties of any value
- The second rule is the 200 percent rule. You can identify more than three, but the total aggregate value of the property you identify cannot exceed 200 percent of the property you sold
The exception is known as the 95 percent exception. Meaning, you can identify more than three properties, and properties valued at more than 200 percent of the property you sold, but when you do, you must acquire at least 95 percent
of the total value of property identified. So it might as well be the 100 percent exception, correct?
- Whatever property you acquire must be a property that you previously identified
- If you fail to identify within 45 days, your exchange proceeds will be returned to you on the 46th day
- If you identify within the 45 days period, but fail to acquire a Replacement Property, your exchange funds will be returned to you after your 180th day
- If you are still within your 45 day identification period, you can revoke a previous identification and re-identify new property