200% rule
A 1031 identification rule letting the taxpayer identify any number of replacement properties, as long as their total value doesn't exceed 200% of what got sold. Used when three isn't enough.
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Part 1 of 4
Why a seller cares
If three candidates are not enough, the 200% rule lets you identify as many as you like, as long as their combined value is under twice what you sold. It is the fallback when a buyer is shopping widely.
Part 2 of 4
A simple example
You sell a rental for $400,000 and identify five small properties totaling $750,000. That is under $800,000, so the identification stands.
| What you identify | Does it qualify? |
|---|---|
| Five properties totaling $750,000 | Yes; under 200% of $400,000 |
| Five properties totaling $900,000 | No, unless you close on 95% of it |
| Three properties, any total | Yes, under the three-property rule instead |
The 200% rule trades a limit on count for a limit on value.
Part 3 of 4
What people get wrong
That naming many properties is safer. It is, until their total crosses 200%, and then the whole identification can fail.
Part 4 of 4 · where to read next
Where it appears in the sale
What a definition is, and what it isn't
Keighbor is a software company, not a law firm, brokerage, or tax adviser. This is general information, not legal, tax, financial, or real estate advice about your sale. Your situation may differ. Before acting on a contract, disclosure, title, tax, or pricing question, ask an appropriately licensed professional in your state.
Written and researched by Keighbor Research · drawn from the reference glossary · how we research and check what we publish
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