A 1031 identification letter is a written document stating which properties you plan to buy with your exchange proceeds. It must be delivered to your qualified intermediary within 45 days of your sale closing. The letter needs a sufficient description of each property (address is best) and has to comply with the 3-Property Rule, the 200% Rule, or the 95% Rule.
When you sell a property in a 1031 exchange, a 45-day clock starts the day the sale closes. Before it runs out, you have to tell your qualified intermediary - the firm handling the exchange - in writing, which properties you plan to buy with the proceeds. That written notice is the identification letter.
The deadline is absolute: midnight on Day 45, with no extensions. Filed on time and described clearly, the letter becomes your evidence of compliance if the exchange is ever audited. The IRS lets you identify replacement property three ways - the 3-Property Rule, the 200% Rule, and the 95% Rule - and the two templates below cover the formats most people use. Adapt the bracketed fields to your own transaction.
Template: 3-Property Rule identification letter
[Date]
To: [QI firm name] [QI address]
Re: Section 1031 Like-Kind Exchange - Replacement Property Identification
Dear [QI contact name]:
This letter identifies replacement property for my Section 1031 like-kind exchange of the property located at [relinquished property address / legal description]. The sale of this property closed on [closing date].
Under the 3-Property Rule (Treasury Regulation 1.1031(k)-1(c)(4)(i)), I identify the following replacement properties:
- [Street address], [City], [State], [ZIP] Legal description: [if available] Anticipated fair market value: $[amount]
- [Street address], [City], [State], [ZIP] Legal description: [if available] Anticipated fair market value: $[amount]
- [Street address], [City], [State], [ZIP] Legal description: [if available] Anticipated fair market value: $[amount]
I intend to acquire one or more of these properties as replacement property within the 180-day exchange period.
Respectfully,
[Signature] [Printed name] [Address] [Phone] [Email]
Template: 200% Rule identification letter
Use this version when identifying more than three properties. The combined fair market value of all identified properties must not exceed 200% of the relinquished property's sale price.
[Date]
To: [QI firm name] [QI address]
Re: Section 1031 Like-Kind Exchange - Replacement Property Identification
Dear [QI contact name]:
This letter identifies replacement property for my Section 1031 like-kind exchange of the property located at [relinquished property address / legal description]. The sale of this property closed on [closing date] for a sale price of $[amount].
Under the 200% Rule (Treasury Regulation 1.1031(k)-1(c)(4)(ii)), I identify the following replacement properties, the aggregate fair market value of which does not exceed 200% of the relinquished property sale price:
- [Address / legal description] - Anticipated FMV: $[amount]
- [Address / legal description] - Anticipated FMV: $[amount]
- [Address / legal description] - Anticipated FMV: $[amount]
- [Address / legal description] - Anticipated FMV: $[amount]
Total identified value: $[total] 200% of relinquished property sale price: $[200% amount]
I intend to acquire replacement property within the 180-day exchange period.
Respectfully,
[Signature] [Printed name] [Address] [Phone] [Email]
What makes an identification letter valid
Requirement | Details |
|---|---|
In writing | Must be a written document, not a phone call, text message, or verbal conversation |
Signed | Your signature (or the authorized signer for an entity) |
Delivered to the QI before midnight on Day 45 | The 45-day clock starts on the day the relinquished property sale closes (Day 0). Day 45 is absolute, with no extensions |
Property described with sufficient specificity | The description must be clear enough that a reader can identify exactly which property you mean. Street address is the standard. Legal description adds certainty. Both together are best |
Identification rule satisfied | 3-Property Rule: up to 3 properties of any value. 200% Rule: any number of properties with combined FMV not exceeding 200% of the relinquished sale price. 95% Rule: any number at any value, but you must close on at least 95% of total identified value |
Property descriptions: what works and what does not
Strong descriptions:
- "456 Oak Street, Austin, TX 78701, Lot 5, Block 12, Barton Heights Addition, Travis County"
- "The commercial office building at 789 Market Street, San Francisco, CA 94103, known as the Acme Building"
Weak descriptions (may be challenged):
- "The apartment building in Denver worth about $500,000"
- "The DST investment vehicle in the Southwest region"
- "The commercial property my broker told me about"
Use the street address at minimum. Add the legal description if available. Either alone may work; both together leave little room to argue over which property you mean.
Delivery methods
Method | Valid? | Best practice |
|---|---|---|
Email with read receipt or written confirmation from QI | Yes | Keep the confirmation email; CC yourself |
Hand delivery with signed receipt | Yes | Get a dated, signed acknowledgment |
Overnight courier (FedEx, UPS) with tracking | Yes | Retain the tracking confirmation |
Certified mail with return receipt | Yes | Retain the return receipt |
Text message | No | Not a reliable written record |
Phone call | No | Not in writing |
For belt-and-suspenders protection, some exchangers send the letter by email with confirmation and by overnight courier. Two documented delivery methods make the timing hard to dispute.
Revocation rules
Before Day 45: You can revoke a prior identification and submit a new one. The revocation also has to be in writing and delivered to your QI. It is uncommon, and drafting the list carefully is what keeps you from needing it.
After Day 45: The identification is locked. You cannot add, remove, or substitute properties. You can choose not to close on an identified property, but you cannot change the list.
Checklist before sending
Record-keeping after delivery
Keep permanent copies of:
- The identification letter as sent
- Proof of delivery (email confirmation, courier receipt, return receipt)
- QI written acknowledgment of receipt
- The dates: Day 0 (sale close), Day 45 (identification deadline), Day 180 (exchange deadline)
These documents are your primary evidence of 45-day compliance if the exchange is ever audited.
Need help drafting your identification? Your qualified intermediary or a 1031 advisor can prepare the letter. Understanding what goes into it helps you catch errors and confirm everything is correct before delivery.
The identification letter is your evidence of compliance if the IRS ever questions the exchange. A clean one is dated and signed, describes each property unambiguously, states the rule you are using, and travels with a delivery confirmation you keep for your records.
Frequently asked questions
What counts as "delivery" of the identification letter?
Email to your QI with a read receipt, hand delivery with signature confirmation, or overnight courier with tracking. A text message doesn't count, and neither does a phone call. The delivery has to be written and documented.
Can I change my identification after Day 45?
No. After Day 45 the list is locked, so you can't add, remove, or swap properties. Before Day 45 you can revoke and start over, which is why it pays to get the list right the first time.
Can I revoke my identification before Day 45?
Yes. You can fully revoke your identification any time before Day 45, which lets you re-identify different properties. After Day 45, you cannot revoke.
Does the letter need to be notarized?
No, notarization isn't required. But the letter should be signed and dated by you, and you should have proof that it was delivered to your QI.
What happens if the property address in my letter is wrong?
A small error may survive if the description is still unambiguous, say the street number is slightly off but the legal description is correct, or you reference a well-known property. It is risky, though, which is the reason to describe each property carefully.