200% rule
A 1031 identification rule letting the taxpayer identify any number of replacement properties, as long as their total value doesn't exceed 200% of what got sold. Used when three isn't enough.
Every term like this one lights up in the step you're on.
Free to set up. No credit card.Part 1 of 4
Why a seller cares
If three candidates are not enough, the 200% rule lets you identify as many as you like, as long as their combined value is under twice what you sold. It is the fallback when a buyer is shopping widely.
Part 2 of 4
A simple example
You sell a rental for $400,000 and identify five small properties totaling $750,000. That is under $800,000, so the identification stands.
| What you identify | Does it qualify? |
|---|---|
| Five properties totaling $750,000 | Yes; under 200% of $400,000 |
| Five properties totaling $900,000 | No, unless you close on 95% of it |
| Three properties, any total | Yes, under the three-property rule instead |
The 200% rule trades a limit on count for a limit on value.
Part 3 of 4
What people get wrong
That naming many properties is safer. It is, until their total crosses 200%, and then the whole identification can fail.
Part 4 of 4 · where to read next
Where it appears in the sale
What a definition is, and what it isn't
Keighbor is a software company, not a law firm, brokerage, or tax adviser. This is general information, not legal, tax, financial, or real estate advice about your sale. Your situation may differ. Before acting on a contract, disclosure, title, tax, or pricing question, ask an appropriately licensed professional in your state.
Written and researched by Keighbor Research · drawn from the reference glossary · how we research and check what we publish
One piece of your sale. Here is where all the pieces live.
In your room, this word explains itself where it appears.
Keighbor keeps your whole home sale in one place and defines every term like this one right where you meet it, in the step you're on. Free to set up, with or without an agent.