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.
Related Services
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.
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.
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.
Property Identification
Nationwide sourcing of single tenant NNN retail and shopping center properties across all 50 states. We help 1031 exchange buyers quickly find high quality replacement properties with credit tenants, predictable income, and minimal management.
Frequently Asked Questions
How does the three-property rule work in a 1031 exchange?
The three-property rule allows you to identify up to three potential replacement properties within the 45-day identification period, regardless of their combined fair market value. You are not required to acquire all three, but any property you ultimately purchase must be one of the three identified. For example, a Washington DC investor selling a $2 million property could identify three single tenant NNN retail properties valued at $1 million, $1.5 million, and $3 million, even though the combined value far exceeds the relinquished property value. This is the most popular identification strategy because of its simplicity.
Can I identify fewer than three properties under the three-property rule?
Yes. You can identify one, two, or three properties under the three-property rule. Identifying fewer properties is perfectly acceptable, but identifying more than three requires you to use the 200 percent rule or the 95 percent exception instead. Many Washington DC investors identify the full three properties to maintain flexibility in case one transaction falls through. We recommend identifying three single tenant NNN retail or other qualifying properties in all 50 states to maximize your options during the exchange period.
What if one of my three identified properties falls through?
If one of your three identified properties becomes unavailable, you can still close on either of the remaining two. This is why identifying three properties rather than just one provides important insurance. You cannot, however, substitute a new property after the 45-day identification window has closed. Our team helps Washington DC investors select three strong candidates upfront, thoroughly vetting each single tenant NNN retail or other replacement property to minimize the risk of a transaction falling apart.