What are the rules for identifying replacement properties with your QI?

In a 1031 exchange, you must identify replacement properties with your qualified intermediary within 45 days of selling your relinquished property. After this 45-day window, you can only purchase properties you have previously identified.

Most investors identify one to three properties, but if you want to identify more than three, you must follow one of these two IRS rules:

The 200% rule: You can identify any number of properties if their total fair market value does not exceed 200% of the value of your relinquished property. For example, if you sell a property for $500,000, you can identify multiple properties worth up to $1 million total.
The 95% rule: You can identify an unlimited number of properties, but you must acquire at least 95% of the total value of all properties identified. For example, if you identify five properties worth $2 million total, you must purchase properties worth at least $1.9 million (95% of $2 million).

Failing to comply with these rules may result in a failed exchange, meaning your sale would be taxable.