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View serviceThe 45 Day Identification Period
Guides
Plain language guide to the IRS 45 day identification deadline, the three property, 200 percent, and 95 percent rules, and how Orange County investors stay compliant.
The 45 day identification period is the first deadline in a Section 1031 exchange. The clock starts the day after the relinquished property closes and runs for 45 calendar days, not business days. Within that window the investor must deliver a written identification of replacement property candidates to the qualified intermediary. There is no extension available outside of federally declared disaster relief, so Orange County investors must move quickly once escrow closes on the property being sold.
The IRS allows three identification methods. The three property rule permits identifying up to three replacement properties regardless of their combined value. The 200 percent rule permits identifying any number of properties as long as their combined fair market value does not exceed 200 percent of the relinquished property sale price. The 95 percent rule permits identifying any number of properties at any combined value, but the investor must actually acquire at least 95 percent of the value identified. Choosing the right method depends on how many replacement candidates the investor is tracking and how confident the investor is in closing on more than one property.
Orange County investors sourcing net lease, multifamily, and industrial replacement property in Irvine, Newport Beach, Costa Mesa, Anaheim, and Huntington Beach often work against a competitive bidding environment during this window. Missing the 45 day deadline forfeits the deferral entirely, and the full gain becomes taxable in the year of the relinquished property sale. California taxes that gain as ordinary income, with combined rates reaching 13.3 percent on top of federal capital gains tax, so investors should confirm identification strategy with a CPA or attorney before the window closes.
What Is Included
- Calendar tracking of the 45 day identification window from the closing date
- Written identification preparation delivered to the qualified intermediary
- Three property, 200 percent, and 95 percent rule eligibility review
- Coordination with brokers sourcing Orange County and out of state replacement candidates
- Documentation formatted to satisfy Treasury Regulation 1.1031(k)-1 identification requirements
- Deadline reminders and milestone alerts leading up to day 45
- Coordination with the qualified intermediary on amendments before the deadline
- Contingency planning if an identified property falls out of contract
Common Situations
- Orange County investor who closed on a relinquished property and needs replacement candidates identified within 45 calendar days
- Investor considering more than three replacement properties and evaluating the 200 percent or 95 percent rule
- Investor whose identified property fell out of escrow with limited days remaining in the window
Frequently Asked Questions
Are the 45 days calendar days or business days?
The 45 day identification period is measured in calendar days, not business days, and there is no extension outside of federally declared disaster relief.
When does the 45 day clock start?
The clock starts the day after the relinquished property closes escrow, not the day identification documents are prepared.
What is the three property rule?
The three property rule allows an investor to identify up to three replacement properties regardless of their combined value.
What is the 200 percent rule?
The 200 percent rule allows an investor to identify any number of replacement properties as long as their combined fair market value does not exceed 200 percent of the relinquished property sale price.
What is the 95 percent rule?
The 95 percent rule allows an investor to identify any number of properties at any combined value, provided the investor actually acquires at least 95 percent of the value identified.
What happens if the identification deadline is missed?
The exchange fails, the deferred gain is recognized in the year of the relinquished property sale, and California taxes that gain as ordinary income.
Example of the type of engagement we can handle
Example Capability
Service type:
45 Day Identification Period Guidance
Location:
Orange County, CA
Scope:
Prepare written identification for three replacement candidates within the 45 day window following the sale of a Santa Ana industrial property
Client situation:
Investor closed on a Santa Ana industrial building and needed replacement candidates identified before day 45
Our approach:
Tracked the identification deadline, reviewed three property rule eligibility, prepared written identification documentation, delivered it to the qualified intermediary before the deadline
Expected outcome:
Written identification submitted within the 45 day window, exchange eligibility preserved, closing coordination proceeding on the identified properties
Contact us to discuss your situation in Orange County, CA. We can share references upon request.
Educational content only. Not tax, legal, or investment advice.
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Identification rules
Three Property Rule
Identify up to three candidate properties anywhere in the United States, regardless of value, within 45 days.
Two Hundred Percent Rule
Name more than three properties as long as the combined value stays within 200 percent of the relinquished sale price.
Ninety Five Percent Rule
If you exceed those limits, acquire at least 95 percent of the total value identified to keep the exchange compliant.
Identification letter helper
Identification Letter 7/21/2026 Qualified Intermediary, Please accept this written identification for my pending Section 1031 exchange in Newport Beach, CA. Replacement properties: 1) ____________________ 2) ____________________ 3) ____________________ I confirm these properties meet the like-kind and value requirements as of today. Signature ____________________
Timeline tracker
Day 0
Close relinquished property in Newport Beach, CA.
Day 15
Secure intermediary receipts and wire instructions.
Day 30
Begin physical and financial due diligence on preferred assets.
Day 45
Submit identification letter with up to three properties.
Day 90
Lock financing, finalize PSA adjustments, order closing docs.
Day 180
Complete closing with escrow and intermediary coordination.
Kick off The 45 Day Identification Period today.
Share your timeline and we will deliver compliant identification support within one business day.