• (800) 237-1031
Contact

What is the 75% Rule or “Substantially the Same” Rule in a 1031 Exchange?

This article dives into a lesser-known rule involving the acquisition of identified Replacement Property under the Regulations being substantially the same as identified, known as the “75% Rule”. Gain a better understanding of what qualifies as substantially the same and other considerations around the 75% Rule.

Under the 1031 Regulations, unless Replacement Property is acquired within 45 days from the date of sale of the Relinquished Property, the intended Replacement Property must be identified in accordance with several specific provisions. In addition, consistent with the identification, it is required that “the Replacement Property received is substantially the same property as identified”. The question often arises is to what extent deviations in the property actually received, or acquired, can still constitute as “substantially the same property”. In the context of a