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.
Related Services
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.
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.
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.
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
When should I use the 200 percent rule instead of the three-property rule?
The 200 percent rule is best when you want to identify more than three replacement properties but can keep their combined value under 200 percent of your relinquished property value. This works well for Washington DC investors who want to exchange into multiple smaller single tenant NNN retail properties, such as several convenience store or quick service restaurant locations across different states. If you only need three or fewer options, the three-property rule is simpler. If you need to identify properties exceeding 200 percent of your sale price, the 95 percent exception is your only alternative.
How is the 200 percent threshold calculated for a 1031 exchange?
The 200 percent threshold is based on the aggregate fair market value of all identified replacement properties compared to the fair market value of the relinquished property on the date of sale. For example, if you sell your Washington DC property for $1.5 million, the total value of all identified replacement properties cannot exceed $3 million. Fair market value is typically established through appraisals, broker opinions of value, or contract prices. We help investors accurately calculate this threshold and identify single tenant NNN retail and other replacement properties in all 50 states that fit within the limit.
What happens if I exceed the 200 percent limit on my identification?
If the combined fair market value of your identified properties exceeds 200 percent of the relinquished property value, and you have identified more than three properties, your identification may be invalid unless you meet the 95 percent exception. An invalid identification means your entire 1031 exchange fails, and you will owe capital gains taxes. This is why careful valuation and planning are critical. We work with Washington DC investors to ensure every identified property is accurately valued and the aggregate stays within the 200 percent limit.