Two clocks, one start date
In the most common (delayed) exchange, both deadlines begin on the day the relinquished property closes. They run at the same time, not back to back:
- Day 45 — Identification. You must identify your potential replacement property or properties in writing, signed and delivered to your qualified intermediary or another permitted party.
- Day 180 — Completion. You must receive (close on) the replacement property. If your tax-return due date for the year of sale — including extensions — falls before day 180, that earlier date controls, so investors who sell late in the year often file an extension to preserve the full window.
The three identification rules
Within the 45-day window you may identify more than one candidate, under one of three rules:
- Three-property rule. Identify up to three properties of any value, and close on any one or more of them.
- 200% rule. Identify any number of properties, as long as their combined fair market value does not exceed 200% of the value of what you sold.
- 95% rule. Identify any number of properties of any value, but you must then acquire at least 95% of the total value identified.
Most individual investors rely on the three-property rule. DSTs are popular here because a single identified DST interest can absorb an exact dollar amount, and a second DST can be identified as a backup.
There are no routine extensions
The 45- and 180-day periods are set by statute. They are not extended for weekends, holidays, financing delays, or a deal falling through. The only common exception is relief the IRS grants after a federally declared disaster, which can postpone deadlines for affected taxpayers. Plan as though no extension exists.
Why exchanges fail at the deadline
The most common failure is running out of time to find, negotiate, and close a suitable property within 45 and 180 days — a real risk in competitive markets. Because a DST is already assembled, financed, and available to close quickly, many investors identify one as a backup so a stalled exchange does not collapse into a fully taxable sale. See what is a DST and DST risks and considerations.
- Both clocks start when your sale closes: 45 days to identify, 180 days to close.
- If your extended tax-return due date precedes day 180, it caps the window — consider filing an extension.
- Identify under the three-property, 200%, or 95% rule; most investors use the three-property rule.
- There are no routine extensions; only federally declared disasters typically postpone the deadlines.
- A DST can serve as a fast-closing backup so a stalled exchange does not become a taxable sale.