200% Rule
The 200% Rule lets a 1031 exchanger identify any number of replacement properties, as long as the combined fair market value does not exceed 200% of the relinquished property's sale price.
What it means
The 200% Rule is typically used when the exchanger wants to spread proceeds across a portfolio — for example, a DST portfolio or multiple smaller net lease properties. Unlike the Three-Property Rule, there is no cap on the number of properties, but combined value must stay within 200% of the downleg price.
This rule is most common in DST replacements (where investors identify several offerings for diversification) and small-deal portfolios.
Example
An exchanger sells for $2M. Under the 200% Rule, they can identify any number of properties whose combined FMV does not exceed $4M.