95 Percent Exception

Advanced identification strategy allowing unlimited property identification in a 1031 exchange, provided you close on at least 95% of the total identified value.

The 95 percent exception is the most flexible but also the most demanding identification rule available to 1031 exchange investors. Under this provision, you may identify any number of replacement properties regardless of their combined value, but you must actually acquire properties representing at least 95 percent of the total identified value. This rule is rarely used because failing to close on even one identified property can jeopardize the entire exchange. However, for sophisticated Washington DC investors with strong financing and well-vetted single tenant NNN retail or other replacement properties in all 50 states, the 95 percent exception can provide maximum acquisition flexibility. We help investors evaluate whether this strategy is appropriate for their situation, structure fail-safe contingencies, and coordinate closings to ensure the 95 percent threshold is met within the 180-day exchange period.

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200 Percent Rule

Guidance on the IRS 200 percent rule enabling 1031 exchange investors to identify more than three replacement properties, as long as their combined value does not exceed 200% of the relinquished property.

Three-Property Rule

Expert guidance on the IRS three-property rule allowing 1031 exchange investors to identify up to three replacement properties regardless of their combined fair market value.

45-Day Identification Period

Strategic guidance for the critical 45-day identification window in your 1031 exchange. We help investors identify qualifying replacement properties before the IRS deadline expires.

180-Day Closing Coordination

End-to-end closing coordination ensuring your 1031 exchange is completed within the mandatory 180-day window. We manage timelines, lender requirements, and escrow milestones.

Frequently Asked Questions

Who should consider using the 95 percent exception in a 1031 exchange?

The 95 percent exception is best suited for experienced investors who have high confidence that every identified property will close. This might include Washington DC investors acquiring multiple single tenant NNN retail properties through a portfolio transaction or buying into a DST investment where closing certainty is high. Because you must close on at least 95 percent of the aggregate identified value, even one failed closing can disqualify the exchange. Most investors are better served by the three-property rule or 200 percent rule unless they have ironclad contracts and financing in place.

How is the 95 percent threshold calculated?

The 95 percent threshold is calculated by dividing the fair market value of replacement properties you actually acquire by the total fair market value of all properties you identified. For example, if you identify $5 million in replacement properties, you must close on at least $4.75 million worth. If any single identified property falls through and drops you below 95 percent, the entire exchange can be disqualified. We help Washington DC investors carefully model these calculations and build contingencies to protect against closing failures.

What are the risks of using the 95 percent exception?

The primary risk is that failing to close on even a small portion of the identified value can invalidate your entire 1031 exchange, triggering full capital gains tax liability. Unlike the three-property rule where you can walk away from one or two identified properties with no consequence, the 95 percent exception demands near-complete execution. Market shifts, lender issues, title problems, or tenant disputes on any identified property create significant risk. Our team helps Washington DC investors mitigate these risks by thoroughly vetting each property and coordinating with lenders and qualified intermediaries well in advance.