1031 Exchange Identification Rules: 3-Property, 200% and 95%

Key takeaways

• You have 45 calendar days from your sale to identify replacement property. Weekends and holidays count, and there's no grace period.
• The notice must be in writing, signed by you and delivered to your qualified intermediary or another non-agent party. Your own CPA, attorney or broker doesn't count.
• Use the three-property rule (up to three properties, any value) or the 200% rule (any number, total value capped at twice your sale price). If you break both, the 95% rule applies, and it's unforgiving.
• Each property must be "unambiguously described," usually by street address, legal description or a clear name.
• You can revoke and replace an identification only until midnight on day 45. After that, the list is locked.
• A list with real backups is the cheapest protection in the exchange. This guide is general information, not tax or legal advice. Confirm your list with your CPA, attorney and qualified intermediary.

Why the identification matters more than people expect

Most people treat day 45 as a formality. They send a letter to the qualified intermediary, then buy what they planned to buy anyway. A qualified intermediary, or QI, is the company that holds your sale money during a 1031 exchange.

The identification is often the decision that decides whether an exchange survives. After midnight on day 45, you're locked in. You can only close on what's on your list.

Say your first choice falls through on day 120, and it was the only thing you named. The exchange is over. Nothing you find on day 46 can rescue it.

So I treat the identification as a portfolio decision. What's your main target? How likely is it to close? What's on the list if it doesn't?

The rules come from Section 1031(a)(3) of the Internal Revenue Code. The details are in the Treasury regulation at 26 CFR §1.1031(k)-1. For the deadlines and the rest of the exchange rules, see my guide to the 1031 exchange rules and timeline.

A few terms first

• Relinquished property is the property you sell.
• Replacement property is the property you buy.
• Fair market value, or FMV, is what a willing buyer would pay a willing seller.
• Identification is your written list of possible replacement properties.
• Boot is anything you receive that isn't like-kind real estate, such as cash. Boot is taxable.

When does the 45-day identification period start and end?

The period starts on the day you transfer the relinquished property. That's usually the day your sale closes and records. The regulation says it "ends at midnight on the 45th day thereafter."

The statute is just as firm. Under Section 1031(a)(3)(A), property you didn't identify "on or before the day which is 45 days after" the sale is treated as not like-kind. In plain terms, it can't be part of your exchange.

Every day counts

All 45 days are calendar days. Weekends count. Holidays count. The deadline doesn't move to the next business day.

Here's an example. You close on Thursday, November 19, 2026. Day 45 is Sunday, January 3, 2027. Your QI's office may be closed that day. So I'd send the notice several business days early.

The IRS fact sheet on like-kind exchanges says these limits "cannot be extended for any circumstance or hardship except in the case of presidentially declared disasters." You can check your own dates with my 1031 exchange deadline calculator.

Selling more than one property

If you sell several properties in one exchange, the clock starts with the first sale. The regulation ties the period to "the earliest date on which any of the properties are transferred." The second sale doesn't get its own 45 days.

The 45 days sit inside the 180 days

You also have to close on replacement property within 180 days or your tax return due date (with extensions) for the year of the sale, whichever comes first. The two periods run at the same time. Day 45 is a checkpoint inside the 180-day window, not a starting line.

What are the three identification rules?

The regulation gives you two identification rules and one rescue rule. You only need to meet one of them.

The three-property rule

You can identify up to three properties, no matter what they're worth. The regulation lets you name three replacement properties regardless of their fair market values.

You could sell a $1,000,000 duplex and identify three $10,000,000 apartment buildings. The identification would be valid. Whether you could buy one is a separate question. You can close on one, two or all three.

This is the rule most people use, and for good reason. It's simple. There's no value question to argue about later.

The 200% rule

You can identify any number of properties, as long as their total value stays at or below 200% of what you sold. The regulation measures the value of what you identify at the end of the identification period. It compares that with the value of your relinquished property on the day you sold it.

Sell for $2,000,000, and you can identify up to $4,000,000 of property. That could be four properties or fourteen.

This rule helps when you want to buy several smaller properties. It also helps when you want more than three options. The catch is value. If one property turns out to be worth more than you listed, you may cross 200% without knowing it. I'd leave a cushion.

The 95% rule

Say you identify more than three properties and go over 200%. You've broken both rules. The regulation then treats you "as if no replacement property had been identified."

There's one rescue. If you actually buy at least 95% of the total value you identified, before the exchange period ends, the identification stands.

The 95% rule fits people who know exactly what they're buying. A typical case is an investor buying a package of properties from one seller, with high confidence that every one will close. It's a poor choice if you're unsure. Missing even one property can sink the whole exchange.

How the three rules compare

Worked examples

All of these are hypothetical, with made-up round numbers. None is a real client or offering. Your CPA should check your real numbers.

Example 1: Three-property rule with backups

You sell a rental fourplex in Oakland for $2,400,000. You owe $900,000 on the loan. After about $100,000 of closing costs, roughly $1,400,000 goes to your QI.

To defer all of the gain, you need three things. You need to buy at least $2,300,000 of property. You need to reinvest all $1,400,000 of cash. And you need at least $900,000 of new debt, or extra cash in its place.

You identify these three:

1. A $2,500,000 net-leased auto parts store in Sacramento (main target)
2. A $2,350,000 small apartment building in Stockton (first backup)
3. A $2,600,000 retail strip in Fresno (second backup)

That's three properties, so their values don't matter. If the auto parts store closes, you're done. You never have to touch the other two.

Example 2: The 200% rule for several properties

You sell a $3,000,000 office building. Your 200% ceiling is $6,000,000. You'd like several single-tenant properties instead of one building. So you identify five.

That's 198% of $3,000,000. It works, but there's only $50,000 of room.

Now say an appraiser later finds the dialysis clinic was worth $1,700,000 at day 45. Your total is $6,050,000. You're over the limit and into 95% territory. I'd drop one property or swap in a smaller one. A target near 180% leaves room for surprises.

Example 3: Over-identifying by accident

You sell for $2,000,000. You send your QI a list of four properties worth $1,200,000, $1,500,000, $900,000 and $800,000.

That's four properties, which is too many for the three-property rule. The total is $4,400,000, which is 220% of your sale price. That breaks the 200% rule too.

The 95% rule now applies. You'd need to close on at least $4,180,000 of the $4,400,000 you named. Buying all four gets you there. Buying the three largest, for $3,600,000, is only 82%. Unless you close on all four, you're treated as having identified nothing. The exchange fails.

The fix, if you catch it before day 45, is to revoke the list and send a corrected one. After day 45, there's no fix.

Example 4: Property you buy before day 45

You sell on Friday, November 13, 2026. You close on a replacement on Tuesday, December 15, 2026. That's day 32.

Under §1.1031(k)-1(c)(1), property you actually receive before the identification period ends is treated as identified. You don't need a separate letter for it.

But say you also want to keep options open for a second purchase. You still need to identify those in writing by day 45, which is Monday, December 28, 2026. The property you already bought counts toward your three properties or your 200%.

Example 5: Sizing a DST backup

You sell a building for $1,500,000. You owe $500,000. After $60,000 of costs, $940,000 of cash goes to the QI. Your full-deferral targets are $1,440,000 of value, $940,000 of cash reinvested and $500,000 of debt replaced.

Your main target is a $1,200,000 property. You'd use $700,000 of cash and a $500,000 loan. That leaves $240,000 of cash and $240,000 of value short of your targets.

So you add a DST interest as your second line. A Delaware statutory trust, or DST, is a trust that owns real estate and sells shares to investors. Say you'd put the $240,000 into a DST with no debt. That fills the cash and value gaps. Your debt target is already met by the new loan.

You add a second DST as your third line, in case the first one sells out. If your main property falls through entirely, you'd need DSTs sized for the full $940,000 of cash and $1,440,000 of value. A leveraged DST's loan can help cover the debt side.

How do you identify property in writing?

The regulation is specific about form. A sloppy notice is one of the easier ways to fail an exchange.

It must be written and signed by you

Under §1.1031(k)-1(c)(2), property must be designated "as replacement property in a written document signed by the taxpayer." Many QIs accept a signed form sent by email. Check that your QI accepts that, and what signature format it wants.

Every taxpayer in the exchange should sign. If a married couple is exchanging, both sign. If an LLC is exchanging, an authorized person signs for the LLC.

You can also identify property in a written exchange agreement signed by all parties before day 45, such as a purchase contract. Most people send a separate letter to the QI anyway. It's clearer.

Who must receive it

The notice must be delivered before the end of day 45 to one of two people:

• the person who must transfer the replacement property to you, such as the seller, or the QI if it's buying for you, or
• any other person involved in the exchange, such as an intermediary or escrow agent, who isn't you or a "disqualified person."

In practice, that means your qualified intermediary. Your own attorney, CPA or real estate agent doesn't count. The IRS fact sheet says your agent can't be your facilitator, and that includes "anyone who has worked for you in those capacities within the previous two years."

I've heard of people emailing their list to their broker and assuming the broker would pass it on. Send it to the QI directly. Ask for written proof that it arrived before midnight on day 45.

What "unambiguously described" means

The regulation says property must be "unambiguously described." For real estate, it lists three ways: a legal description, a street address or a distinguishable name. Here are some pointers.

• Use the full street address. Include the city, state and ZIP code. If the property has several parcels, add the assessor's parcel numbers.
• Say which part you're buying. If it's only part of a property, be exact. For example: "Units 101–110 of 500 Main Street," or "an undivided 40% tenant-in-common interest in 500 Main Street."
• Describe anything still to be built. Under §1.1031(k)-1(e), the notice must include a legal description of the land and as much detail about the building as is practical. You only get credit for what's real property when you take title.
• Don't name a category or a hope. "Any of the Phoenix pharmacies listed by a certain broker" isn't an identification. Neither is "a net-lease property worth about $2 million in Texas."

You must buy what you named

Under §1.1031(k)-1(d), what you buy must be "substantially the same property as identified." You can't name one building and buy the one next door. Small changes are fine. A different property isn't.

How to identify DST interests

The IRS said in Rev. Rul. 2004-86 that a taxpayer "may exchange real property for an interest in the Delaware statutory trust described above" under Section 1031. That's why DST interests can serve as replacement property. You identify the trust interest, not each building it owns.

Here's what I'd put on the line for a DST:

• the full legal name of the trust, as it appears in the offering documents, not a marketing nickname,
• the dollar amount or share of beneficial interests you intend to buy, and
• the addresses of the trust's properties, if your QI wants them.

In practice, a DST interest is usually listed as one line. That can make one line on your list stand for a trust with several buildings. Confirm with your QI how it will count each line under the rule you're using.

Valuing DST interests under the 200% rule

The 200% rule raises a value question with DSTs. Many DSTs carry debt. When you buy an interest, you're credited with your share of both the equity and the trust's loan.

Say you invest $500,000 in a trust with a 50% loan-to-value ratio. Loan-to-value, or LTV, is the loan divided by the property's value. Your share of the property would be about $1,000,000.

So which number counts toward 200%, the $500,000 or the $1,000,000? Ask your QI and CPA before you send your list. Then leave room either way. If you use the three-property rule instead, the question goes away.

I can't name specific offerings in a guide like this. None of the trust names in my examples refer to real offerings. If you're considering DST interests, you'd review each one's private placement memorandum before you identify it.

How do you build and send an identification, step by step?

Here's the process I walk clients through. Most of it happens before day 45, and some of it before the sale even closes.

Step 1: Mark your dates the day you close

Write down day 45 and day 180. Then check your tax return due date. If your sale closed in the fall, plan to extend your return, so you keep the full 180 days.

Step 2: Know your targets

Ask your CPA for three numbers. How much value do you need to buy? How much cash must you reinvest? How much debt must you replace? Your list has to be able to hit all three.

Step 3: Choose your rule

Most people should use the three-property rule. Use the 200% rule only if you need more than three options. Avoid the 95% rule unless you're sure every property will close.

Step 4: Pick a main target and real backups

Your backups should be properties you'd actually buy. They should be available, and they should fit your targets. A backup you'd never close on wastes a slot.

Step 5: Do the due diligence early

You can't add to the list after day 45. So review your backups during the 45 days, not after. For a DST, that means reading the memorandum and checking the sponsor, the property and the debt.

Step 6: Write the notice

Use your QI's form if it has one. Describe each property clearly. For DSTs, use the trust's legal name and the amount. Have every taxpayer sign.

Step 7: Send it to the right person

Deliver it to your QI, not your broker or CPA. Send it several business days early. Ask for a dated, written receipt.

Step 8: Keep the receipt with your tax records

You'll need the dates for Form 8824. The Form 8824 instructions say replacement property "must be identified within 45 days." The form asks for the date you identified property.

What does a simple identification letter look like?

Here is a plain example. It uses made-up names and addresses. Your QI's own form may look different, and your attorney should review whatever you send.

To: [Your qualified intermediary]

Re: Exchange of 123 Oak Street, Sacramento, CA (closed November 13, 2026)

Under Treasury Regulation §1.1031(k)-1(c), I identify the following replacement property:

1. 456 Pine Avenue, Stockton, CA 95202 (APN 000-000-000)
2. $400,000 of beneficial interests in Example Industrial Portfolio, DST
3. $400,000 of beneficial interests in Example Multifamily Trust, DST

Signed: [Every taxpayer in the exchange]

Date: [Before midnight on day 45]

Three lines, clear descriptions, every signer and a date. That's the whole job.

Can you change or revoke an identification?

Yes, but only before the end of day 45. Under §1.1031(k)-1(c)(6), an identification "may be revoked at any time before the end of the identification period." The revocation must be a signed, written document. You deliver it to the same person who got the original notice.

If you made the identification in a written agreement, such as a purchase contract, the revocation must be a written amendment. Or it can be a signed notice to all parties to that agreement.

A revoked property no longer counts toward your three or your 200%. Here's an example. You identify A, B and C on day 20. On day 38, you learn C has an environmental problem. You revoke C in writing and identify D. You're still within the three-property rule.

After midnight on day 45, the list is fixed. You can't add or swap anything, even if a better property shows up. You can still choose not to buy something you identified.

What about furniture, appliances and other incidental property?

Since 2018, only real property qualifies for a 1031 exchange. But a small apartment building often comes with appliances and some office furniture. A hotel comes with beds and linens. Those items are personal property.

The regulation gives relief for identification. Under §1.1031(k)-1(c)(5), incidental personal property isn't counted as a separate property if two things are true.

1. In standard deals, that kind of property is usually sold with the real estate.
2. Its total value doesn't exceed "15 percent of the aggregate fair market value of the larger item of property."

The regulation's own example is furniture with an apartment building. So a $1,500,000 building with $60,000 of furniture and appliances counts as one property on your list, not two. The $60,000 is 4% of the building's value.

The relief is for identification only. The personal property still isn't like-kind real estate. Its value can be taxable boot, usually a small amount. Your CPA will split the price between real and personal property on Form 8824.

What happens if you miss the 45-day deadline?

The exchange fails. There's no extension for a missed identification, except IRS disaster relief. IPX1031 reprints and explains the disaster rules in Rev. Proc. 2018-58. Under them, a deadline that falls on or after a federally declared disaster can move back 120 days or to the end of the general postponement, whichever is later. That relief can't run past one year or past your return due date.

A seller who backs out on day 44 doesn't extend anything. Neither does a market with nothing for sale, or a QI on vacation.

What follows a failed identification

• The money comes back. Under §1.1031(k)-1(g)(6), if you identify nothing by day 45, the agreement can let the QI release your funds after day 45.
• The sale becomes taxable. Your gain is recognized. That includes gain from past depreciation, which Section 1(h)(1)(E) taxes at up to 25%.
• The 3.8% tax may apply. The IRS says the net investment income tax is 3.8% once income passes $250,000 for joint filers or $200,000 for single filers.
• California withholds. The FTB's page for qualified intermediaries says that in a failed exchange, the QI must "Withhold 3 1/3% (0.0333) of the total sales price."

The year-end wrinkle

One rule helps if the sale and the failure fall in different years. The 1994 Treasury rule that added §1.1031(k)-1(j)(2) lets you use the installment method in some cases. You need a bona fide intent to do an exchange, and a QI holding the money. You're then generally treated as paid when the money actually reaches you.

Here are two hypotheticals.

• Close on November 2, 2026. Day 45 is December 17, 2026. You identify nothing, and the QI releases funds in December. The gain goes on your 2026 return.
• Close on December 1, 2026. Day 45 is January 15, 2027. You identify nothing, and the QI releases funds in January 2027. The gain is generally reported on your 2027 return.

The second case isn't a strategy. It's a consolation.

If you identified property but can't buy it

If you named property but none of it closes, the money generally stays with the QI. It stays until day 180, until you've bought everything you're entitled to, or until a qualifying contingency occurs. You can't get it back on day 60 just because you've given up.

That's the rule that keeps you out of "constructive receipt," meaning access to the cash. It's why your list should be realistic.

How can DSTs serve as backups?

Here's a common problem. An investor finds the property they want and gets it under contract. They identify only that property. Then the inspection turns up a roof problem. Or the lender cuts the loan. Or the seller gets a better offer and walks. It's day 90, and nothing else is on the list.

A backup fixes this. DST interests are one tool people use for it, because of how they're bought. The trust has already bought the real estate, often with financing in place. Investors buy shares of the trust.

In my practice, once paperwork, funding and approvals are complete, closing can often take two to three business days. That isn't promised. Offerings sell out, and a DST can close to new investors. But there's no inspection period and no loan for you to qualify for.

Common backup patterns

Pattern 1: One direct property and two DSTs. You use the three-property rule. You list your main direct property and two DST interests, each sized for your full exchange. If the main property closes, you buy nothing else. If it fails, you have two DSTs to choose from. One sold-out offering doesn't strand you.

Pattern 2: Main property plus a "plug." Your main property absorbs most of your exchange, but not all. Example 5 above shows the math. A DST sized to the gap can keep that leftover cash tax-deferred instead of taxable.

Pattern 3: Several DSTs under the 200% rule. You've decided to go fully passive. You list four or five DST interests across different property types and sponsors. You keep the total well under 200%, counted the way your QI and CPA agree. You might buy two or three of them.

Pattern 4: Two DSTs as targets, one as backup. An investor who wants to spread risk lists two DSTs as the main plan and a third as the spare.

Two cautions

First, don't let the backup become the default by inertia. A DST is a security with its own risks. Buy one only if you'd choose it on its merits, not just because the clock ran out.

Second, do your homework before day 45. You can't buy a DST you didn't identify. So the review of the memorandum, the sponsor, the property and the debt has to happen during the 45 days. In 2005, FINRA's predecessor told firms in Notice to Members 05-18 that they "should make a reasonable investigation" of these offerings. My own review process, described below, is continuous.

DSTs are generally open only to accredited investors. The SEC's accredited investor bulletin explains the tests. For individuals, that generally means income over $200,000 ($300,000 with a spouse or partner) in each of the past two years, or net worth over $1 million, not counting your home.

I've written more on how I build a 1031 exchange plan, including how I mix direct property and DSTs. My DST guide covers how DSTs work in detail.

Direct property vs. DST interest as a backup

Here's how the two kinds of backups compare. These are general features. Every deal is different.

Mistakes to avoid

1. Identifying only one property. This is the single largest avoidable risk in most exchanges.
2. Sending the notice to the wrong person. Your broker, attorney or CPA can't receive it. The QI or the seller can.
3. No proof of delivery. Ask the QI to confirm receipt in writing, with the date.
4. Vague descriptions. "A property in Austin" fails. Use the address, legal description or clear name.
5. Over-identifying by a little. Four properties at 205% fails just as surely as ten at 400%.
6. Forgetting that bought property counts. If you closed on one property on day 30, it uses one of your three.
7. Missing a signature. Co-owners, spouses and entity signers should all sign if they're in the exchange.
8. Putting off due diligence on backups. You can only buy what you named, and you can't add after day 45.
9. Waiting until day 45. Weekends and holidays don't stop the clock, and offices close.
10. Guessing at DST values under the 200% rule. Agree on the method with your QI and CPA first.

Risks and limitations

The identification rules carry risk on their own. Using DSTs adds investment risk.

Exchange risks

• Failure risk. A missed deadline, unclear description, over-identification or delivery to the wrong person can fail the exchange. Your gain then becomes taxable.
• Lock-in. After day 45, you can only buy what you named. If the market or the property changes, you may have to choose between closing and paying the tax.
• Money tied up. If you identify property but don't buy it, the QI generally keeps your funds until day 180.

Risks of DST interests used as replacement property or backups

• Illiquidity. There's no public market. The SEC's bulletin on private placements says investors "should be prepared to hold the securities indefinitely."
• Loss of principal. The real estate can lose value. You can lose some or all of your investment.
• Distributions are not guaranteed. They depend on how the property performs and can be cut or stopped.
• Sponsor reliance and no control. You have no vote on management, leasing, refinancing or sale. The trust's structure limits how it can respond to problems.
• Fees and load. Sponsor fees, selling commissions and offering costs reduce the amount invested and your returns.
• Leverage. Many DSTs carry debt. Debt magnifies losses, and a default can cost the property.
• Availability. An offering you named may sell out before you close.
• Tax-law change. The tax treatment of DSTs and 1031 exchanges depends on current law, which can change.
• Accredited investors only. DST interests are offered by private placement memorandum. Each offering's risks are described there.

How I help with identification

My background is in applied mathematics and applied statistics, which I studied at Babson College. I spent years in real estate acquisitions, management and development. That includes work at ValueRock Realty Partners, Faris Lee Investments, Westport Capital Partners and Arbor Bay Capital Partners. I've been involved in more than $10 billion of real estate investment activity.

When a client is inside the 45 days, here's how we work.

1. An introductory call. I learn your sale price, cash, debt and deadline.
2. We review opportunities together. I tell you why I'm considering each one, what I like and where I have reservations. We build a list with a main target and real backups.
3. We close. My team coordinates paperwork with the sponsor and your QI.

My due diligence covers five areas: broker-dealer review, investment manager audit, investment offering review, real estate assessment and institutional underwriting. I partner with outside auditors in each one. The review is continuous, not one-time. I offer DSTs from more than 20 institutional sponsors.

I'm not your CPA, attorney or QI. I work alongside them. Securities are offered through Aurora Securities, Inc., member FINRA/SIPC. Baker 1031 Investments is independent of Aurora.

What my data shows

The identification rules decide what you may buy. The market decides what you can buy. Here's what my offering records as of October 2026 show. The set covers 76 DST offerings from 38 sponsors. These figures describe offerings I track. They aren't a forecast or a promise about any future offering.

Fewer than a third were open to new money

This is the number I'd keep in mind on day 1 of your 45 days. Only 22 of 76 offerings (29%) were open or had limited availability. The rest were under review, closed or passed over.

That's why I suggest naming more than one DST if you use DSTs at all. A trust you identify on day 30 can close before you're ready on day 60. A second line protects you.

Low minimums help with "plug" amounts

Example 5 above had $240,000 left over. With minimums like these, that kind of gap can often be placed in a DST instead of taken as taxable boot.

Debt changes the 200% math

36 of 76 offerings (47%) are all-cash, with no loan. Another 16 (21%) have LTV above 50%. Among offerings that use debt, the median LTV is about 49%.

An all-cash DST's value equals your investment. A leveraged DST's value can be about twice your investment at 50% LTV. If you're using the 200% rule, a list of leveraged DSTs can reach the cap much faster than a list of all-cash ones.

Other patterns

• Property types: multifamily 31 (41%), industrial 18 (24%), net lease 15 (20%, including energy royalty programs), self-storage 5, retail 4 and medical office 3. That range lets a backup list span more than one property type.
• Projected year-one distribution rates: median 4.7%, range 4.0% to 9.0%, across 71 offerings that published one. These are projections and are not guaranteed.
• Hold periods: a projected 10-year hold is the most common, at 31 offerings. Plan for a long hold if you identify a DST.
• Exit paths: 44 offerings (58%) offer an optional 721 exchange into a REIT, 13 (17%) make it mandatory and 17 (22%) have none.
• Locations: 33 states, led by Florida (14), Texas (13), North Carolina (8) and Georgia (7).

I also track more than 1,100 full-cycle 1031 DST investments for performance. Full-cycle means the property was bought, held and sold, so we can see actual results, not just projections.

Frequently asked questions

Do weekends and holidays count toward the 45 days?

Yes. All 45 days are calendar days, and the deadline doesn't move to the next business day. If day 45 lands on a Sunday or New Year's Day, your notice is due by midnight that day. Send it a few business days early so your QI can confirm receipt.

Can I identify a property that isn't under contract?

Yes. You don't need a signed purchase agreement, and the property doesn't even have to be listed. You only need a clear description. But naming properties you can't realistically buy wastes slots.

Can I identify a property I already own?

Not as replacement property in a standard exchange. You'd be buying it from yourself. If you want exchange funds to improve property you own, look at improvement exchanges. Rev. Proc. 2004-51 limits that safe harbor for property you already own, and I cover the options in my reverse exchange guide.

How many DSTs can I identify?

Under the three-property rule, three. Under the 200% rule, as many as you like, if the total value stays at or below 200% of what you sold. Leveraged DSTs can use up that 200% quickly, so agree on the value method with your QI.

Do I have to buy everything I identify?

No. Under the three-property and 200% rules, you can buy any one or more and skip the rest. The 95% rule is the exception. If you rely on it, you must buy at least 95% of the total value you named.

Can I name a different property after my first choice falls through?

Only before midnight on day 45. Until then, you can revoke a property in writing and name a substitute. After that, the list is closed, which is why backups belong on it from the start.

Does my identification have to state a price?

The regulation doesn't require a price for a direct property; the description is what counts. But the 200% rule tests value at day 45, so writing down your estimate is sensible. For DSTs and partial interests, state the dollar amount or share you plan to buy.

Is an email or a text message a valid identification?

The rule calls for a written document signed by you and delivered to the right person. Many QIs accept a signed form by email with an electronic or scanned signature. A casual text is a poor choice, so use the QI's form, sign it and get a dated receipt.

What if I buy a replacement property before day 45?

Property you actually receive before day 45 is treated as identified, with no letter needed. It still counts toward your three properties or your 200%. If you want more options, identify them in writing by day 45.

Does the furniture in an apartment building count as a separate property?

Usually not. If the personal property normally comes with the building and is worth no more than 15% of it, it isn't counted separately for identification. Its value may still be taxable boot.

Can I get more time if a disaster hits?

Sometimes. Under Rev. Proc. 2018-58, IRS disaster relief can push your deadline back by 120 days or to the end of the postponement period, whichever is later. It can't run past one year or your return due date, and your QI should get written notice that you're relying on it.

All of this is general information about federal law as of October 2026. It isn't tax or legal advice. Please have your CPA or tax attorney and your qualified intermediary review your identification before you send it.

Sources

• 26 U.S.C. §1031, Exchange of real property held for productive use or investment (Cornell LII)
• 26 CFR §1.1031(k)-1, Treatment of deferred exchanges (Cornell LII)
• IRS Fact Sheet FS-2008-18, Like-Kind Exchanges Under IRC Code Section 1031
• IRS, Instructions for Form 8824 (2025)
• IRS Rev. Rul. 2004-86
• IRS Rev. Proc. 2004-51
• IRS, Net Investment Income Tax
• 26 U.S.C. §1, Tax imposed (Cornell LII)
• Federal Register, April 20, 1994, final rule on installment reporting in deferred exchanges (GovInfo)
• Disaster Relief Deadline Postponements under Rev. Proc. 2018-58, IPX1031
• California FTB, Qualified intermediary / accommodator withholding
• FINRA (NASD) Notice to Members 05-18
• Investor.gov, Updated Investor Bulletin: Accredited Investors
• Investor.gov, Private Placements under Regulation D