In a delayed 1031 exchange you must identify replacement property in writing within 45 days after you sell: up to three properties of any value, or any number of properties whose combined fair market value is no more than 200 percent of the value of what you sold. A list that breaks both limits when day 45 ends is treated as identifying nothing, unless you go on to buy identified property worth at least 95 percent of everything on it. You can change the list before day 45 ends, but only by a signed, written revocation.
The two deadlines
These rules apply to a delayed exchange, in which you sell first and buy later (see what a 1031 exchange is). Two periods start when you transfer the property you are selling, usually the day that sale closes:
- The identification period ends at midnight on the 45th day after the transfer. Property not identified by then is treated as not like-kind, so buying it does not complete the exchange.
- The exchange period ends at midnight on the earlier of the 180th day after the transfer or the due date, including extensions, of your tax return for the year of the sale. A sale late in the year can leave fewer than 180 days unless the return is extended (see the 180-day rule).
The 45 days are only for identifying. Each purchase can close on its own date within the exchange period. When several properties are sold on different dates as part of the same exchange, both periods run from the earliest sale.
How to identify a property
An identification counts only if it:
- is a written document signed by you, or is written into an exchange agreement signed by all parties before the 45 days end;
- describes each property unambiguously, such as by legal description, street address (with the unit, for a condominium), or distinguishable building name. A description by category, county, or price range does not work, and agreeing later on which property was meant does not fix it; and
- if it is a separate document, is hand delivered, mailed, faxed, or otherwise sent before the 45 days end, either to the person obligated to transfer the replacement property to you or to someone else involved in the exchange who is not you or a disqualified person, such as your qualified intermediary, an escrow agent, or a title company.
Your attorney, accountant, or real estate agent is generally a disqualified person if they worked for you in the two years before the first sale, unless that work was only on your 1031 exchanges, so a list sent only to one of them may not count. Property you actually receive within the 45 days is treated as identified without a notice, but it still counts toward the limits below. Keep proof of when the list was sent; the date of the written identification goes on line 5 of IRS Form 8824.
Choosing the properties is your decision. A qualified intermediary such as BlueLion is a proper person to receive the list but cannot make it valid, so review it with your tax adviser before sending. To set up an exchange before your sale closes, use Start My Exchange.
The three-property rule
You may identify up to three replacement properties, whatever their values. The limit is three per exchange, not three per property sold. You do not have to buy all three: buying one identified property within the exchange period can complete a valid exchange, although unspent funds can be taxable, as explained below.
Whether adjoining parcels bought from one seller count as one property or two is not settled. When the count is close, treat each separately described parcel as its own property, or ask your tax adviser before sending the list.
The 200 percent rule
You may identify any number of properties if their combined fair market value at the end of the 45 days is no more than 200 percent of the combined fair market value of everything you sold, measured on the dates you sold it. After a $400,000 sale, for example, the ceiling is $800,000, so five condominiums worth about $150,000 each fit, and you would not need to buy all five.
- Use full value, not equity. Fair market value is determined without subtracting mortgages. A $400,000 sale with a $150,000 loan still has an $800,000 ceiling.
- Count everything. Every identification not properly revoked counts, and so does replacement property already received within the 45 days. After a $100,000 sale and a $50,000 purchase on day 20, you may identify two more properties of any value, or any number worth no more than $150,000 in total.
- Value construction as of delivery. Property to be built or improved counts at its estimated fair market value on the date you expect to receive it, including the improvements expected by then (see improvement exchanges).
Fair market value is a question of fact, and an asking price is not proof of it. A list right at the ceiling can fail if one property proves to be worth more than you counted, so leave room and keep your evidence of value.
The 95 percent rule
The 95 percent rule is not a separate limit you can switch to. It is a narrow exception for a list that breaks both limits, and it saves that list only if you buy nearly everything on it.
If, when the 45 days end, you have identified more than three properties worth more than 200 percent of what you sold, you are treated as having identified nothing. Only two things survive:
- replacement property you received before the 45 days ended; and
- identified property you receive within the exchange period, but only if the identified property you receive is worth at least 95 percent of the combined fair market value of everything you identified.
The 95 percent is measured against the whole list, including properties you never buy, with each property valued on the earlier of the day you receive it or the last day of the exchange period. For example, assuming values do not change, a seller of a $500,000 property who identifies six properties worth $2,000,000 in total must buy at least $1,900,000 of them. If one $300,000 purchase falls through and the other five close, the seller has bought 85 percent of the list, and the exchange fails except for any purchase that closed within the first 45 days.
After day 45, an oversized list cannot be rescued by choosing three of its properties or by switching rules. Before day 45 ends, the fix is a written revocation.
Revoking or changing a list
An identification can be revoked only before the 45-day period ends, by a written document signed by you and hand delivered, mailed, faxed, or otherwise sent before then to the person who received the identification. If the property was identified in the written exchange agreement, the revocation must be a written amendment to the agreement or a signed document sent to all parties to it.
Every identification counts unless revoked that way. A new list does not replace an old one: two lists of three properties are one list of six, which then has to fit the 200 percent rule or meet the 95 percent rule. In the regulation's own example, a seller of a $100,000 property identified two properties, then two more, and then revoked the first two by phone. The oral revocation did not count, the four properties were worth $310,000 against a $200,000 ceiling, and the seller was treated as having identified nothing, even though two of the listed properties were later bought.
A careful way to change a list:
- Write a revocation that names the earlier identification by date and each property being removed.
- Sign it and send it before day 45 ends to everyone who received the earlier list, or amend the exchange agreement in writing if the property was identified there.
- Send the new list the same way, count the combined list again, and keep proof of when each document was sent.
Buying several replacement properties
One property can be exchanged for two or more, and two or more for one. The identification rules above are the practical limit on how many properties a plan can include.
For full deferral, the test covers the exchange as a whole, not each property. In general, the replacement properties together should cost at least as much as the property sold, and all of the exchange funds should go into them. Cash you receive is taxable up to the amount of your gain. A mortgage paid off when you sell is treated like cash received, except to the extent it is offset by debt on the replacement properties or by cash you add (see mortgage boot). Closing costs and loan terms change the numbers, so have your CPA run them before signing contracts.
Example: one duplex into four rentals
This example uses round numbers and ignores closing costs. An investor sells a duplex for $600,000 and pays off a $200,000 mortgage, leaving $400,000 of exchange funds, and plans to buy four rentals at $250,000 each with new loans for the balance.
- Four properties exceed the three-property rule, so the list must fit the 200 percent rule. The ceiling is $1,200,000, based on the full $600,000 price rather than the $400,000 of equity, and the $1,000,000 list fits.
- A fifth $250,000 rental added as a backup would bring the list to $1,250,000, over the ceiling. The investor would then need to buy at least $1,187,500 of it, which here means all five.
- If all four close using the full $400,000, or only three close for $750,000 using the full $400,000, the purchases cost more than the duplex sold for and the new loans exceed the old one, so no gain is recognized from cash or debt relief.
- If only one closes, the exchange is valid for that property, but the unspent funds and the part of the old mortgage not replaced are generally taxable, up to the amount of the gain.
With several purchases, lining up financing early matters more, because every closing has to fall within the exchange period.
Example: two duplexes into one building
An investor sells two duplexes in one exchange, for $300,000 on March 1 and $400,000 on March 20, to buy one small apartment building. Both periods run from March 1: the list is due by midnight on April 15, and the purchase must close by August 28 (day 180) unless the tax return for the year of the sale is due sooner. The investor may identify three properties in total, not three per duplex, or any number within a $1,400,000 ceiling. Whether two sales should be one exchange or two is a question for your tax adviser and intermediary before the first closing.
Common questions
Can a 1031 exchange turn one property into two?
Yes. Identify both within 45 days and close each within the exchange period. For full deferral, the two together, not each one, generally need to replace the value of the property sold and use all of the exchange funds.
Do I have to buy every property I identify?
No. Under the three-property and 200 percent rules you can buy any of them, including just one. Only a list over both limits needs the 95 percent rule.
Primary sources
- 26 U.S.C. 1031 (exchange of real property held for productive use or investment)
- Treas. Reg. 1.1031(k)-1 (deferred exchanges: identification, revocation, 200 percent and 95 percent rules)
- Treas. Reg. 1.1031(d)-2 (treatment of assumption of liabilities)
- Treas. Reg. 1.1031(j)-1 (exchanges of multiple properties)
- IRS, Instructions for Form 8824 (like-kind exchanges)
This guide is general information about 1031 exchanges as of September 2026, not tax or legal advice for your transaction. BlueLion 1031 serves as a qualified intermediary and does not provide tax, legal, investment, or real estate brokerage advice.
Go deeper
This guide draws on these chapters of the BlueLion 1031 reference.
