Short answer: You can identify up to three replacement properties of any value, or any number of properties if their combined value is no more than 200% of what you sold. If you exceed both limits, the identification still works only if you buy at least 95% of the total value you identified.
Reviewed by Jon Hilley. Last updated September 29, 2026.
When you identify replacement property within the 45-day window, you must stay within one of three limits: up to three properties of any value, any number of properties whose total value is no more than 200% of what you sold, or any number at all if you end up buying at least 95% of the total value you identified. These rules shape the first half of your 1031 exchange timeline.
You only need to satisfy one rule. Most investors use the three-property rule because it's simple. The 200% rule helps when you want more backups, and the 95% exception mostly rescues someone who identified too much and then bought nearly all of it.
Key rules
- Three-property rule: identify up to three properties regardless of their value (Treas. Reg. §1.1031(k)-1(c)(4))
- 200% rule: identify any number of properties if their total fair market value doesn't exceed 200% of the fair market value of all the property you sold (Treas. Reg. §1.1031(k)-1(c)(4))
- 95% exception: identify any number and value if you actually acquire at least 95% of the total fair market value of everything identified (Treas. Reg. §1.1031(k)-1(c)(4))
- Proper form: the identification must be in writing, signed by you, describe each property unambiguously, and be delivered to the QI or another party who isn't a disqualified person before the end of day 45 (Treas. Reg. §1.1031(k)-1(c)(2)-(3))
- Fixed deadline: the 45 days are calendar days counted from the sale closing, with no extension for weekends or holidays (IRC §1031(a)(3))
- Over-identifying: if you exceed the limits and don't meet an exception, you're treated as having identified nothing (Treas. Reg. §1.1031(k)-1(c)(4))
How do the three identification rules work?
The three-property rule
This is the default. You can name three properties worth $5 million in total after selling a $1 million building; value doesn't matter. You don't have to buy all three. Buying any one of them completes the exchange, and how much you spend determines how much gain you defer.
What is the 200% rule in a 1031 exchange?
If you want four or more options, add up their full market values. If the total is at or below twice the value of what you sold, you're within the 200% rule. Use full property value, including any debt, not your equity or your planned down payment. Every property on the list counts toward the limit, including backups you never buy. If you sold several properties in one exchange, the limit is measured against all of them combined.
What is the 95% rule in a 1031 exchange?
If you identify more than three properties and exceed 200%, the identification survives only if you acquire at least 95% of the total value identified by the end of the exchange period. In practice, that means buying essentially everything on the list. One failed closing can sink the whole exchange.
Can you change your identification?
Yes, before the deadline. You can revoke an identification and substitute new properties in a signed writing delivered to the same party before the end of day 45. After day 45, the list is locked. Property you actually close on within the 45 days counts as identified automatically. The only way to get more time is IRS disaster relief for a federally declared disaster, covered in Can you extend a 1031 exchange deadline?
Example: identifying after a $1,000,000 sale
- Relinquished property sold: $1,000,000 fair market value
- 200% limit: $2,000,000
- Option A, three-property rule: three properties at $1,200,000, $1,500,000 and $900,000, total $3,600,000 (allowed, because value doesn't matter with three)
- Option B, 200% rule: four properties at $450,000, $500,000, $550,000 and $480,000, total $1,980,000 (allowed, because it's under $2,000,000)
- Option C, over both limits: four properties at $500,000, $550,000, $600,000 and $550,000, total $2,200,000
- 95% requirement for Option C ($2,200,000 × 95%): $2,090,000 acquired
Under Option C, suppose you close on three of the properties after day 45 for a total of $1,650,000 ($500,000 + $550,000 + $600,000) and skip the fourth. You've acquired 75% of the identified value, far short of 95%. Because the list broke both the three-property and 200% rules, you're treated as having identified nothing, and the exchange fails. With Option B, you could have bought any combination.
Before you send your list, check it with our 45-day identification validator.
Common mistakes
- Measuring the 200% rule by equity: We see investors add up their down payments instead of purchase prices. The rule uses full market value.
- Vague descriptions: "A unit in the Main Street building" isn't enough. Use a street address with unit number, or a legal description.
- Identifying only one property: If that deal falls apart after day 45, you have nothing to buy. We encourage clients to use all three slots, including a realistic backup that can close quickly.
- Sending the list to the wrong person: Emailing your list to a real estate agent or attorney who is a disqualified person doesn't count. Send it to your QI.
.jpg)
