The clock on a 1031 exchange starts the moment the relinquished New York City property closes, and the taxpayer has exactly 45 calendar days from that closing date to identify replacement property in writing. There is no grace period for a weekend or a holiday, and no extension for a slow co-op board or a title search that runs long. Day 45 falls where it falls, and a written identification notice delivered to the qualified intermediary after midnight on that day generally voids the exchange regardless of how close the taxpayer came.
What the Written Notice Actually Has to Say
The identification is not a verbal conversation with a broker or an email describing a neighborhood the taxpayer likes. It has to be a signed, written document delivered to the qualified intermediary that unambiguously describes each candidate property, typically by legal description, street address, or distinguishable name if the address alone would not be sufficient. For a Manhattan condominium unit, that usually means the unit number and building address; for an outer-borough industrial parcel, it may mean the block and lot number pulled from the New York City tax map.
Verbal identification, a text message to a real estate agent, or a property mentioned in a purchase contract that was never formally identified to the intermediary does not satisfy the requirement, even if the taxpayer genuinely intended to buy that property. The written notice is the only version of events the IRS will look at if the exchange is ever reviewed.
Three Ways to Structure the List
The tax code gives an exchanger three separate ways to build the identification list, and choosing the right one depends on how many candidates are realistic and how the values compare to the relinquished sale price.
- The three-property rule allows up to three candidates identified regardless of their combined value, which suits a taxpayer replacing one Brooklyn multifamily building with one or two comparable options
- The 200% rule allows any number of candidates as long as their combined fair market value does not exceed twice the relinquished property's sale price, which fits a Manhattan seller spreading proceeds across several smaller assets
- The 95% rule removes both the count and the value cap, but requires the taxpayer to actually close on at least 95% of the identified value by day 180
Most New York City exchangers use the three-property rule because it is the simplest to satisfy, but a seller coming out of a large single asset often needs the 200% rule to preserve real optionality across boroughs and asset classes.
Why the Five Boroughs Make Sourcing Tighter
Forty-five days is a short runway anywhere, but New York City compresses it further. A co-op or condo replacement usually requires board application materials assembled and submitted before a contract is even signed, and board review timelines are outside the taxpayer's control. An outer-borough industrial or multifamily candidate can carry title questions tied to decades of prior ownership that a title company needs extra time to clear. A taxpayer who waits until week three of the window to start touring replacement candidates in Queens or the Bronx is working against a deadline that does not bend for any of this.
The practical fix is starting the replacement search before the relinquished sale even closes, so the 45-day clock is spent finalizing a written list rather than beginning one from scratch.
Revising the List Before Day 45
Up until midnight on day 45, a taxpayer can revoke or revise an identification notice freely, adding candidates, dropping ones that fell through diligence, or switching from the three-property rule to the 200% rule if more options are needed. Once day 45 passes, the list is locked, and the only replacement property the taxpayer can ultimately close on is one that appears, correctly described, on that final notice.
Because of this, treating the notice as a draft until close to the deadline, rather than filing an early conservative list and never revisiting it, tends to produce better outcomes when a promising candidate surfaces late in the window.
Common 1031 Exchange Questions
Does the 45-day clock pause for a co-op or condo board review in New York City?
No. The identification deadline runs from the relinquished property's closing date regardless of how long a board takes to review a replacement application. Board timelines have to be planned around the deadline, not the other way around.
Can a taxpayer identify more than three properties under the three-property rule?
No. The three-property rule caps the count at three candidates regardless of value. Identifying a fourth property under that rule generally disqualifies the entire list, which is why sellers needing more options switch to the 200% rule instead.
What happens if no property is identified by day 45?
The exchange fails and the sale proceeds are returned to the taxpayer as a taxable sale, since the qualified intermediary cannot release funds toward a replacement property that was never identified in writing.
Can the identification list be changed after it is submitted?
Yes, as long as the change is made and delivered to the qualified intermediary before midnight on day 45. After that point the list is final and cannot be revised.
Does a backup candidate need to be listed even if the taxpayer is confident about one property?
It is generally worth doing. A single-candidate list leaves no fallback if financing, board approval, or diligence kills that one property, and once day 45 passes, no new candidate can be added regardless of the reason the first one fell through.
