Replacement Property Identification

Replacement property identification is the written list, signed and delivered to your qualified intermediary before midnight on day 45, that names the property or properties you intend to close on. In Connecticut, where price points swing sharply between Fairfield County and the rest of the state, choosing which identification rule to use is often the difference between a workable list and a cramped one.

Getting the rule and the list right the first time matters more than most investors expect, since a mistake discovered on day 44 leaves almost no room to fix it before the deadline passes.

The three-property rule lets you name up to three candidates with no value cap, which works cleanly when you're comparing similarly priced properties — say, three Hartford County multifamily buildings. The 200% rule allows more than three properties as long as their combined fair market value doesn't exceed twice the relinquished property's sale price, which fits better when the search spans Fairfield County's higher basis alongside more affordable New Haven or Waterbury candidates. The 95% rule, which requires closing on 95% of the identified value regardless of count, is a narrower tool most investors only need when the first two don't fit the situation.

An identification isn't a phone call or an email mentioning a property in passing — it has to unambiguously describe the property, typically by legal description or street address, and it has to be signed and delivered to the qualified intermediary before the 45th day. A verbal mention to your QI, even a documented one, does not satisfy the requirement on its own.

We also keep a dated copy of the delivered identification and the QI's acknowledgment of receipt, since proving the list was actually submitted on time matters as much as writing it correctly in the first place.

The mistakes that derail an identification tend to repeat across exchanges:

• Naming more properties than the three-property rule allows without checking the 200% math
• Describing a property loosely enough that the QI can't confirm it later
• Missing the day-45 deadline because it fell on a weekend
• Identifying a property still tied up in a contingency the seller hasn't disclosed
• Leaving out a backup candidate when the top choice is likely to fall through
• Failing to revise the list in writing when a candidate changes

Most of these mistakes come from treating identification as a formality to knock out quickly rather than a document that carries real legal weight, which is why we build the list with the same care as any closing document.

Because Hartford, Fairfield, and New Haven counties each move at their own pace — a Fairfield County net lease deal can go under contract to another buyer in days while a Hartford County multifamily listing sits for weeks — we sequence due diligence so the fastest-moving submarket gets reviewed first, keeping the slower candidates as a genuine backup rather than an afterthought.

Can I change my identification list after day 45 has passed?

No. Once the 45-day window closes, the list is fixed, and you can only close on properties named on it under the rule you used. Any changes have to happen in writing before that deadline, which is why we push to lock in a workable list with a few days of margin rather than right up against the wire.

Which rule works best when comparing a Fairfield County property against a New Haven County property?

It depends on the value spread. If the total value of everything you want to identify stays under twice your START EXCHANGE REVIEW price, the 200% rule usually gives more flexibility than trying to force the comparison into a three-property list.

Does the 95% rule ever make sense for a Connecticut exchange?

It's a narrow tool — mainly useful when an investor wants to identify a large number of properties or interests that exceed the 200% value cap, and is willing to commit to closing on 95% of that identified value. Most Connecticut exchanges fit more comfortably under the three-property or 200% rule.

What if none of my identified properties are available to close by day 180?

If every identified property falls through, the exchange fails and the held proceeds become taxable, which is exactly why we push for a real backup candidate on the list rather than treating the identification as a formality.

Do I need a signed purchase contract on a property before I can identify it?

No, you can identify a property before you have a signed contract on it, as long as the written identification describes it clearly enough for your qualified intermediary's records.