1031 Identification Rules: 3-Property, 200%, and 95%
The 1031 identification rules give you exactly three ways to name replacement property by day 45 — and your written list is locked after that. Pick the wrong rule for your situation and you either run out of options or blow up the exchange.
The rules come straight from the Treasury regulations (26 CFR 1.1031(k)-1(c)(4)). Here's each one in plain terms.
3
3-Property Rule
Up to three properties, any value. Close on one or more. The standard route.
200%
200% Rule
More than three properties — if their combined value stays under 200% of what you sold.
95%
95% Rule
Identify anything — but you must actually acquire 95% of the identified value. Rarely used.
In writing, signed, delivered to your Qualified Intermediary by midnight of day 45. Source: 26 CFR 1.1031(k)-1(c)(4).
The Three Rules
Identification must be specific and in writing — a signed document naming each property, delivered to your Qualified Intermediary by midnight of day 45. "An industrial property in Texas" doesn't count. An address does.
- 3-Property Rule: identify up to three properties of ANY value. Close on one or more. This is the standard route — most exchanges use it.
- 200% Rule: identify more than three, as long as their combined value stays under 200% of what you sold. Useful when spreading into several smaller assets.
- 95% Rule: identify anything you want — but then you must actually acquire 95% of the total identified value. Rarely used, easy to fail.
How to Use the Rules Well
List three properties, not one: your favorite, a solid second, and a closable backup. If your favorite falls through on day 60, you can only buy what's on the list. Our live Texas inventory exists so your three slots are real, priced, and closable — not hopes.
Current Replacement Property Inventory
The Brown Portfolio
Houston, TX · Small Bay Industrial
$7,760,000
57,565 SF · 100% occupied
East Houston Shallow Bay Portfolio
Houston, TX · Small Bay Industrial
Contact for Pricing
· 100% occupied
Highway 30 Business Park
College Station, TX · Small Bay Industrial
Contact for Pricing
186,225 SF · 94.5% occupied
Common Questions
Can I change my list after day 45?
No. You can only acquire property you identified by day 45. That's why the backup slot matters more than the favorite.
What makes an identification valid?
Written, signed by you, unambiguous (street address or legal description), and delivered to your QI or another permitted party by day 45. Verbal doesn't count.
Which rule should I use?
The 3-property rule, unless you're deliberately splitting into four or more assets — then check the 200% math with your QI before listing.
Ready to Deploy Your 1031 Capital?
Call us at 717-553-6888 or send an inquiry. We coordinate the exchange from identification to closing.
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