Question:
“We’ll be selling a rental house in Alabama and want to buy something here doing a 1031 exchange. I know we have to designate what property we’re going to buy within 45 days of closing the Alabama house. Can we identify more than one?”
Answer:
Yes.
Here are the 3 options you have for identifying your upleg property. (“Upleg” is the property you’re acquiring; “downleg” is the one you’re selling):
A. 3-Property Rule
You can identify 3 properties, regardless of their prices.
B. 200% Rule
You can identify any number of properties as long as their total prices don’t exceed 200% of the property you sold.
C. 95% Rule
You can identify any number of properties, as long as the sum total price of the properties you actually buy is at least 95% of the sum total of those you identified.
Sounds complicated, I know. Most people use the 3-Property Rule.
