The following time deadlines were issued by the Internal Revenue Service in the 1991 IRC §1031 Final Regulations.  Missing these deadlines could mean the loss of thousands of dollars of tax deferral - they MUST be taken seriously by everyone involved in an exchange.

All time periods begin on the day the benefits and burdens of the Relinquished Property transfers from the exchangor to a new owner (usually the date the sale closes):

Identification Period

The Replacement Property must be identified within 45 calendar days from the closing of the sale of the Relinquished Property (the "identification period"). This 45 day rule is very strict and is not extended if the 45th day should happen to fall on a Saturday, Sunday or legal holiday or for any other reason, including natural disasters!

Exchange Period

The Replacement Property must be received by the taxpayer within the "exchange period," which ends within the earlier of 180 days after the date on which the taxpayer transfers the property relinquished, or the due date for the taxpayer’s tax return for the taxable year in which the transfer of the Relinquished Property occurs.  The taxpayer may obtain extensions of the tax filing deadline up to, but not exceeding, the full 180 days.

Manner of Identification

Replacement Property must be identified in a written document (the "identification notice”) signed by the taxpayer and hand-delivered, mailed, telecopied, or otherwise sent and received before the end of the identification period.  Written Identification  should be made to the person obligated to transfer the Replacement Property to the taxpayer (regardless of whether that person is a disqualified person); or any other person involved in the exchange  other than the taxpayer or a disqualified person.  Examples of persons involved in the exchange include any of the parties to the exchange, an intermediary, an escrow agent and a title company.

Identification Notice

The identification notice must contain an unambiguous description of the Replacement Property.  Note: Personal property up to 15% of total value is considered incidental and need not be identified.

Real Property

In the case of real property, the identification must include the legal description, a street address, or a distinguishable name.  In addition, when the identified Replacement Property consists of property to be improved, the taxpayer needs to adequately describe the land and provide as much detail regarding the construction of improvements as is practical at the time the identification is to be made.

Multiple Properties

Taxpayers have the flexibility of identifying more than one  property as Replacement Property.  The options are:

• 3 Property Rule - The taxpayer may identify as potential Replacement Property any three properties, without regard to their Fair Market Value.

• 200% Rule - The taxpayer may identify as potential Replacement Property any number of properties, as long as the aggregate Fair Market Value of the properties  does not exceed 200%  of the aggregate Fair Market Value of all the Relinquished Properties  as of the initial transfer date.

• 95% Exception - If the taxpayer has identified more properties than are permitted under both of the two rules above, the taxpayer must receive, by the end of the exchange period, property the Fair market Value of which is at least 95% of the aggregate Fair Market Value of all the properties identified.

Fair Market Value

For this purpose, the Fair Market Value of property is determined as of the earlier of the date the property is received by the taxpayer, or the last day of the exchange period.  Further, the fair market value of property means the  fair market value of the property without regard to any liabilities secured by the property.

Revoking an Identification

Identification may be revoked prior to the end o  the 45 day identification deadline.  Oral revocations are not permitted.  Instead, the person to who the original identification was sent must be notified in a written document signed by the taxpayer and hand delivered, mailed, telecopied or otherwise sent and received before the end of the identification period.

The taxpayer is advised to seek the advice of a CPA and/or tax consultant regarding the identification period, exchange period and manner of identification. Compliance with the rules and regulations contained in IRC 1031 is the sole responsibility of the taxpayer.