How Many Properties Can You Identify in a 1031 Exchange?

We are often asked by those involved in finding a replacement property for a 1031 exchange, “How many properties can you identify in a 1031 exchange?” The answer is easy – as many as you want! However, it should be noted that there are rules around the properties purchased for a 1031 exchange. Let’s dive into these rules of identifying your replacement properties and how your Qualified Intermediary (QI) will help you decide which solution is best for your 1031 exchange.

45-Day Identification Period

There are two simultaneous “clocks” that simultaneously start ticking when an investment property is sold. The first is called the “45-Day Identification Period,” referring to the window of time the taxpayer or seller has to list (or identify) the properties they intend to buy. 

The second running clock, referred to as the exchange period, runs for 180 days. This clock is the deadline to close on any, or all, of the properties on the Identification List (Rev. Proc 2003-39, sec. 1.02).

Rules for Identification

The IRS website explains that there are three different ways to consider how to list your identified properties. Each of these identification strategies can be useful, but do require forethought and planning as you work through the sale of your relinquished properties.

3-Property Rule

The 3-Property Rule is the most common way to identify. In short, you can identify any three properties of any value.

For example, if you sell a duplex for $500,000, you can identify a ranch for $750,000, a condo in Manhattan for $5.6 million, and a VRBO rental in Bozeman, MT for $300,000. Note: if you did close on the VRBO rental only, you would not complete a full exchange, and would have a tax liability.

200% Rule

This rule can be used strategically as a way to go from one asset to many different assets. For example, going from a large apartment complex to vacant lots, townhomes, and single-family residences.

The rule states that you can identify any number of properties, as long as the identified properties’ combined fair market value does not exceed 200 percent of all the relinquished properties transferred by the taxpayer (i.e. the seller). 

For example, if you sold a $50 million asset and desired to buy smaller assets worth $100,000 each, you could identify up to 1,000 different properties, which would equal $100 million (or 200% of $50 million). I’ve never seen this done, but under this rule, something like this could happen.

95% Rule

It is unlikely that this rule will apply to many exchangers, but it still has a purpose and can be used. This is a scenario where the taxpayer would like to buy real estate assets worth much more than the value of the relinquished property. 

The rule states that you can identify any replacement property before the end of the identification period if received before the end of the exchange period if the taxpayer (i.e. buyer) has identified the replacement property with a fair market value of at least 95 percent of the aggregate value of all identified replacement properties. 

For example, sell a strip mall for $5 million, and identify several assets that total about $18 million. The plan would be to close on $17.1 million (i.e. 95%), or more, of those identified.


So, the answer to the question above, “How many properties can you identify in a 1031 exchange?” is quite simple. IRS tax code and Treasury Regulations outline how to accomplish the taxpayer’s vision by providing different identification modes. There is a solution for every situation.

In the 1031 exchange market? Millcreek Commercial has a portfolio of ready-to-identify 1031 exchange properties, perfect for any investor. All of the properties available through Millcreek Commercial are known for their safety, security, and stability.

To discuss how a commercial real estate investment will benefit you, book a brief consultation with a Millcreek associate here and discover the perfect property for your needs!