Many taxpayers considering a 1031 exchange want to know if they can change their property identification at any point throughout the exchange process. That’s our topic for today’s article.
The First 45 Days
During the first 45 days after the closing of your relinquished property (the Identification Period), you are free to revoke or change your 1031 Replacement Property Identification provided that it is done in writing, signed by the taxpayer and it is sent to the qualified intermediary (or other person involved in the exchange that is not disqualified) that you identified to previously. If you do revise your Identification to add new properties to your list (to remove and replace other previously listed properties), then you may want to make it clear that your subsequent Identification supersedes and replaces any prior designations by writing that on the last Identification. Otherwise, it may be unclear if your subsequent Identification is intended to add more properties (potentially pushing you over the Three-Property Rule or 200% Rule).
After Day 45
After the 45th day of the exchange, the only properties that will be considered like-kind (once the 45th day has elapsed and the Identification Period is over) are those properties that were properly designated. You are not allowed to change your 1031 Replacement Property Identification after the 45th day, so if a better property comes along that you would prefer to purchase, you are S-O-L (Statutorily Out of Luck).
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