1) I know I have a maximum of 45 days from the day of closing on the sale escrow to identify my replacement property. How do I do this?
The identification must be written, specific, and delivered to a qualified, unrelated third party. There are three options to choose from for identification:
- 3-PROPERTY RULE – Up to three potential properties, no matter what their value (this is the most popular chose).
- 200% RULE – Any number of properties, but the total value cannot exceed twice the relinquished property.
- 95% RULE – Any number of properties, but you must close on 95% of the aggregate value of those identified properties.
2) If I have already opened an escrow but not yet closed, is it all right to do an exchange?
Yes, but once you have closed on your sale escrow, it is too late. You cannot close and then re-open it to do an exchange.
3) What if I have closed escrow, but have not touched the money?
Unfortunately, it’s too late. The investor must not receive any cash or other benefits from the sale of their relinquished property which is known as constructive receipt.
4) Can I identify a replacement property verbally?
No, the physical address of the potential replacement properties must be in writing and delivered to a Qualified Intermediary.
5) Are there any other specific timing rules?
Yes. Here’s a breakdown of the timing rules:
Prior to closing on the relinquished property, you must demonstrate the intent to perform an exchange through written agreement with the Qualified Intermediary .
Within 45 days from the closing date on the relinquished property, you must identify one or more potential replacement properties. It’s important to point out
