When you identify replacement property in a 1031 exchange, you must fit within one of three identification rules. This worksheet walks through the 3-property rule, the 200% rule, and the 95% rule with a worked example so you can stay compliant within the 45-day window.

Direct AnswerYou can identify up to three properties of any value (3-property rule), OR any number of properties whose combined value does not exceed 200% of what you sold (200% rule). If you blow past both, the 95% rule applies: you must actually close on at least 95% of the total value you identified. Use a qualified intermediary; the identification deadline is strict and not extendable except by federal disaster relief.
Information current as of 2026.

General information only — not tax, legal, or financial advice. A 1031 exchange has strict, unforgiving deadlines and significant tax consequences. Work with a CPA and a qualified intermediary (QI) before you act. A REALTOR® cannot serve as your QI. Verify current IRS and California FTB rules with a licensed tax professional.

The three identification rules

  • 3-property rule: identify up to three replacement properties, regardless of their fair market value. This is the most common choice.
  • 200% rule: identify four or more properties, provided their combined fair market value is no more than 200% (twice) the value of the property you relinquished.
  • 95% rule: if you exceed both the 3-property count and the 200% value cap, your identification is still valid only if you actually acquire at least 95% of the aggregate value you identified.

200% rule worksheet — the math

  1. Write down the sale price (fair market value) of your relinquished property. Call this V.
  2. Multiply V by 2. This is your 200% ceiling.
  3. Add up the fair market values of every property you want to identify.
  4. If your total is at or below the 200% ceiling, you comply with the 200% rule — identify as many as you like.
  5. If your total exceeds the ceiling AND you have more than three properties, you fall under the 95% rule and must close on 95% of the identified value.

Worked example

You sell a relinquished property for $1,000,000. Your 200% ceiling is $2,000,000. You want to identify five candidate properties valued at $400,000, $450,000, $350,000, $300,000, and $250,000 — a total of $1,750,000. Because $1,750,000 is below the $2,000,000 ceiling, you satisfy the 200% rule even though you named five properties.

If instead those five totaled $2,300,000, you would exceed the ceiling. With more than three properties and a total above 200%, you would then have to acquire at least 95% of $2,300,000 — roughly $2,185,000 — to keep the exchange valid.

Which rule should you use?

  • Most exchangers use the 3-property rule for simplicity and a backup option or two.
  • Use the 200% rule when you want flexibility across many smaller properties (for example, several DST interests).
  • Avoid relying on the 95% rule unless you are confident you will close on nearly everything you identify — it is unforgiving.

Identification mechanics

  • Identification must be in writing, signed, and dated.
  • It must be delivered to your qualified intermediary by the 45th day.
  • Property descriptions must be unambiguous (address or legal description).
  • You may revoke and re-identify, but only within the 45-day window.

How Brian helps

Brian helps you build a realistic shortlist of replacement candidates that fits a single identification rule, then sequences offers so your most likely closings come first — reducing the risk of leaning on the 95% rule.

Frequently Asked Questions

What is the 200% rule in a 1031 exchange?

It lets you identify any number of replacement properties as long as their combined fair market value does not exceed 200% — twice — the value of the property you sold.

Can I just identify three properties instead?

Yes. Under the 3-property rule you can identify up to three properties of any value, which is the simplest and most common approach.

What is the 95% rule?

If you identify more than three properties and exceed the 200% value cap, you must actually acquire at least 95% of the total identified value for the exchange to remain valid.

How is fair market value measured for these rules?

Generally by the property's value at the end of the 45-day identification period. Confirm the correct measure with your CPA and QI.

Do these limits change the 45-day deadline?

No. Whichever rule you use, your written identification is still due to your QI by day 45.

Is this worksheet tax advice?

No. It is general educational information. Confirm your numbers and strategy with a CPA and qualified intermediary.

Primary sourcesIRS — Like-Kind Exchanges, California FTB Form 3840. General information only — verify current figures and confirm legal, tax, or financial questions with a licensed professional.

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