Can You Do a Multi-Property 1031 Exchange?

If you are thinking about selling your real estate property, then a 1031 exchange can be your best friend to defer capital gain taxes.

Using a 1031 exchange to sell a real estate property and buy another like-kind property can save you thousands of dollars of federal taxes on gains at the time of the sale. The best part about this tax deferral strategy is that it can be used indefinitely—even when you pass your properties to your future generation.

There are several rules that you need to follow within Section 1031 of the tax code in order to complete a 1031 exchange effectively, which can feel a little convoluted even in the simplest of investment property swaps. If you are an investor with multiple properties, for example, you may feel overwhelmed by the additional moving pieces to maneuver.

It can still be done! The IRC Section allows you to exchange several properties into one or one property into several replacement properties. So what exactly do you need to know to successfully complete a multi-property 1031 Exchange?

A Refresher on 1031 Exchange Rules


The first and  most important factor in any 1031 Exchange is the investor’s “intent”- you must hold both the relinquished and replacement properties for productive use. That is, the properties must be used as an investment or for income-producing purposes in order to qualify.


One other important component  is timing. In order to complete a 1031 Exchange successfully, your sales and purchases must fall within a strict timeline. The first deadline is a  45-day identification window in which you must identify the potential properties within 45 days starting from the closing of the first sale of the relinquished properties. The 180-day exchange period also begins when the first of the sales close, where you have 180 days after the close of your relinquished property to close on your replacement properties.


The identification rules for a multi-property 1031 exchange are the same as a single exchange rule. They are:

  • Three property rule: the investor can identify up to three potential properties of unlimited values for replacement and may obtain any combination of the properties identified.
  • 200% identification rule: the investor can identify more than three potential properties so long as the total market value of all the identified properties does not exceed 200% of the total market value of the relinquished properties.

Alternative solutions when doing a multi-property 1031 exchange

Since exchangers are required to follow the same rules and deadlines to complete multi-property exchanges, doing so can be more challenging. Here are a few strategies that can be utilized when selling multiple properties to ensure a favorable outcome:

  1. Stalling the sale of your relinquished properties while you find and negotiate the replacement properties. Tie up the desired replacement property with an option to purchase (with or without a lease) until sales of the relinquished properties can be negotiated and closed at roughly the same time.

  2. Perform a reverse 1031 exchange. Instead of first selling your relinquished properties and then acquiring the replacement properties, you can buy replacement properties first and then sell your other properties.

  3. If all else fails, consider a partial reverse exchange to get more time to complete the transaction. This can happen if an exchanger closes their first relinquished property and then closes their replacement property before a second sale closes, they can set up a standard exchange and then a reverse exchange to extend the time periods for completing the entire transaction.

With proper planning and guidance through the use of an experienced 1031 Exchange Realtor and Qualified Intermediary, exchanging multiple properties into one or more replacement properties can achieve a variety of investment objectives. Whatever your goals are, always remember to consult with your tax adviser or attorney as part of the evaluation process.

If you are interested in expanding your investing portfolio, or even consolidating some of your assets, I would love to help make that process as smooth as possible. Contact me below for your 1031 needs! 

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