The Exchangor has a maximum of 180 days from the closing of the relinquished property or the due date of that year’s tax return, whichever occurs first, to acquire the replacement property. This is called the Acquisition Period. The first 45 days of that period is called the Identification Period. During this 45 days, the Exchangor must identify the candidate or target property which will be used for replacement. The identification must:
– Be in writing,
– Signed by the Exchangor, and,
– Received by the facilitator or other qualified party (faxed, postmarked or otherwise identifiably transmitted through Federal Express or other dated courier service).
This must all occur within the 45-day period. Failure to accomplish this identification will cause the exchange to fail.
Identification
Three rules exist for the correct identification of replacement properties.
1) The Three Property Rule dictates that the Exchangor may identify three properties of any value, one or more of which must be acquired within the 180-Day Acquisition Period.
2) The Two Hundred Percent Rule dictates that if four or more...
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