CPA-led 1031 exchange guide
1031 Exchange Identification Rules
The identification rules give you three different ways to keep your options open during the 45-day window. Choosing the right method depends on how many candidates you want to track and how their combined value compares to your sale price.
Method 1 — The 3-Property Rule
Identify up to three replacement properties of any value. Most investors use this rule because it's the simplest. Example: you sell for $1M and identify three potential replacements worth $1.2M, $900K, and $1.4M. Any of the three is valid; you can buy one or more.
Method 2 — The 200% Rule
Identify any number of properties as long as the combined fair market value does not exceed 200% of your relinquished sale price. Example: you sell for $1M; you can identify four properties totaling up to $2M.
Method 3 — The 95% Rule
Identify any number of properties of any value, but you must actually acquire properties worth at least 95% of the total identified value. Rarely used because of the all-or-nothing risk.
Mechanics that apply to all three
Identification is in writing, signed, and delivered to the QI by midnight Day 45. Property descriptions must be unambiguous — usually a street address or legal description.
Frequently Asked Questions
Can I mix methods?
No. You pick one method for the entire identification.
Can I revoke and re-identify before Day 45?
Yes. You can revoke and resubmit any time before midnight Day 45. After that the list is locked.