Section 1031 gives an investor a fixed 45 calendar days from the closing of the relinquished property to name candidate replacement properties in writing. The deadline does not move for weekends, federal holidays, or a slow title search, and it runs whether the exchange involves a single Jackson County apartment building or a bundle of Johnson County retail pads. The identification itself does not require a signed contract, only a written notice naming the candidates with enough specificity that a stranger could locate each one.
Why the Clock Starts at Closing, Not Before
Day one is the calendar day after the relinquished property closes, not the day the exchange agreement was signed or the day the investor first spoke with a broker. In a bi-state Kansas City exchange, where a Missouri closing and a Kansas closing may run on slightly different title timelines, the trigger is still the relinquished sale alone, so a delay on the replacement side has no bearing on when the 45 days begins or ends.
Because the count is calendar days and not business days, an exchange that closes on a Friday still loses those weekend days from the window, which matters more than it seems once an investor is trying to schedule tours, order title work, and confirm financing on a compressed timeline.
Investors who sell a relinquished property in Jackson County and are shopping replacement candidates on both sides of the state line often discover that Missouri and Kansas title companies close on slightly different documentation schedules, so a candidate near Overland Park may be ready to name a week earlier than a comparable one in the Crossroads. Building the timeline around the slower of the two states keeps the identification list realistic instead of optimistic.
The Three-Property Rule
Most exchanges rely on the three-property rule, which allows an investor to name up to three replacement candidates in writing regardless of their combined fair market value. This is the simplest of the three identification methods and works well when an investor already has a short list of strong candidates, since it removes any need to track a value ceiling against the relinquished sale price.
The 200 Percent Rule
An investor who wants to name more than three candidates can do so under the 200 percent rule, provided the combined fair market value of every property named does not exceed 200 percent of what the relinquished property sold for. This method suits a Kansas City investor casting a wider net across multifamily, industrial, and net-lease product, since a longer list improves the odds that at least one candidate survives due diligence and financing.
The 95 Percent Rule
If a list exceeds both the three-property limit and the 200 percent ceiling, the exchange can still hold up under the 95 percent rule, but only if the investor ultimately acquires at least 95 percent of the total value identified. In practice this rule leaves almost no room for a candidate to fall through, which is why most Kansas City investors treat it as a fallback rather than a starting strategy.
What Counts as a Valid Written Identification
A valid identification is a signed writing delivered to the qualified intermediary, unambiguously describing each candidate by legal description, address, or another description precise enough to remove doubt. A verbal mention to a broker, a text message describing a neighborhood, or a property that was merely toured does not satisfy the requirement on its own.
The notice can be revised any number of times before the 45-day deadline expires, so an investor who loses a candidate to a competing offer in week five still has room to substitute a backup, as long as the replacement notice reaches the intermediary before midnight on day 45. Once that deadline passes, the list is locked regardless of what changes afterward on any named property.
Because Missouri and Kansas record legal descriptions a little differently, an investor naming candidates on both sides of the state line should confirm each description matches what the county recorder actually has on file rather than relying on a listing sheet's shorthand address, since a mismatch discovered after day 45 cannot be corrected.
Common Questions
When exactly does the 45-day identification period begin?
It begins the day after the relinquished property closes, counted in calendar days, and runs for 45 days with no extension for weekends or holidays.
What is the difference between the three-property and 200 percent rules?
The three-property rule caps the list at three candidates with no value limit, while the 200 percent rule allows more than three candidates as long as their combined value stays within twice the relinquished sale price.
When would an investor need the 95 percent rule?
Only when a list already exceeds both the three-property count and the 200 percent value ceiling, and in that case the investor must end up acquiring at least 95 percent of the total identified value for the exchange to hold.
Can identified properties be changed after the notice is submitted?
Yes, a revised written notice can replace an earlier one at any point before the 45-day deadline, which allows a candidate that fell out of contract to be swapped for a new one.
Does touring a property or discussing it with a broker count as identifying it?
No, only a signed written notice delivered to the qualified intermediary within the 45-day window satisfies the identification requirement.
