95% Rule
A fallback: identify unlimited properties of any value, but you must actually acquire 95% of that total value.
Definition
The 95% rule is the escape hatch when you have blown past both the 3-property and 200% limits. It lets you identify any number of properties of any total value — but only if you actually close on at least 95% of the total value you identified. Fall short of 95% and the whole identification is disqualified.
Why it matters
This rule is rarely used because the 95% acquisition requirement is unforgiving — one deal falling through can sink it. Treat it as a last resort, not a plan.
Related terms
General education — not tax or legal advice. This explains how §1031 exchanges work in general terms and uses simplified assumptions. Rules and tax rates change and your situation is specific. Talk to a qualified CPA or tax attorney before you rely on any of it. See our full terms & legal notice.