The short answer
Yes. Beyond three names you are on the 200% rule, which lets you identify any number of properties as long as their combined fair market value at the end of day 45 does not exceed twice the value of what you sold. The trap with trusts is what you count: the regulation does not say whether a beneficial interest is valued at your equity or at your share of the trust's real estate including its loan, so the cautious approach counts the gross figure. On that basis a single zero cash flow trust can use up a third of your room with a small check.
At a glance
| Three-property rule | Up to three properties of any value |
|---|---|
| 200% rule | Any number, if their total value at day 45 is no more than twice the value sold |
| Sale-side value | Fair market value of everything you sold, on the date of transfer |
| If both are broken | Treated as identifying nothing, unless the 95% rule rescues the list |
| 95% rule | You actually receive at least 95% of the value of everything you named |
| Cautious DST value | Your equity plus your share of the trust's debt |
| Hypothetical | $150,000 into a trust at 85% leverage counts as about $1,000,000 |
Past three names, the whole list is measured against twice what you sold
Reg. section 1.1031(k)-1(c)(4)(i) allows three properties "without regard to the fair market values," or "any number of properties as long as their aggregate fair market value as of the end of the identification period does not exceed 200 percent of the aggregate fair market value of all the relinquished properties as of the date the relinquished properties were transferred."
The comparison is value to value, not equity to equity. Your side is the gross value of what you sold, before your mortgage payoff; the replacement side is the value of what you named, measured on day 45.
Each name on the list is a property. A trust that owns one building is one name; how to describe each trust and how portfolio trusts are counted are covered separately, and the basic count rules are in how many properties you can identify.
Count each trust at your share of its real estate, debt included, until someone tells you otherwise in writing
Rev. Rul. 2004-86 treats a trust investor as owning "an undivided fractional interest" in the trust's property, and that property carries the trust's loan. The regulation's own examples use unencumbered property, so they do not settle whether your interest is valued at the check you write or at the slice of building it represents.
The cautious reading uses the slice of building. A $300,000 check into a debt-free trust is $300,000. The same check into a trust financed at 50 percent represents $600,000 of real estate.
Leverage is what fills the cap. The client describes its cash out DSTs as high-leverage trusts, often 80 to 90 percent, so a small equity amount stands for a large share of property, which is the point of using one to replace debt.
Worked example: six trusts on a $1,500,000 sale, counted the cautious way
Hypothetical, round figures; run your own numbers with your CPA and intermediary. You sell a rental worth $1,500,000 with no mortgage, so your ceiling is $3,000,000. You want room for backups, so you name six trusts.
Gross values: debt-free trusts A ($400,000), B ($400,000) and C ($300,000) total $1,100,000; trust D at 50 percent leverage with $200,000 of equity is $400,000; zero cash flow trust E at 85 percent leverage with $150,000 of equity is $1,000,000; debt-free backup F is $400,000. The total is $2,900,000, inside the cap.
Swap backup F for a second $150,000 zero and the total becomes $3,500,000. Under the cautious count you broke both rules, and the list survives only if you close at least 95 percent of $3,500,000, which your proceeds cannot buy.
- Debt-free trusts: count the equity you name.
- Leveraged trusts: equity divided by the equity share, so $200,000 at 50% debt is $400,000.
- Zero cash flow trusts: equity divided by the small equity share, so $150,000 at 85% debt is $1,000,000.
- Direct property: its full price, whatever loan you plan.
The 95% rule is a rescue you should not plan on
Paragraph (c)(4)(ii) says that if you name too much, you are "treated as if no replacement property had been identified," except for property received before day 45 and, under the 95% rule, if you receive identified property worth at least 95 percent of everything named.
With trusts that almost never works, because the point of naming extras was not to buy them all. Revoked names do not count, but only if the revocation was written, signed and sent before day 45 under paragraph (c)(6).
Build the list in the order the cap is consumed
Size the list before you start choosing offerings, so the leveraged trusts are placed first and the backups fit around them.
- Write down the gross value of everything you sold; double it.
- Ask each sponsor for the trust's loan-to-value in writing and compute each name's gross value.
- Place leveraged and zero cash flow trusts first, then debt-free trusts, then backups, until the total approaches the cap.
- Keep a margin below the ceiling, since values are tested at day 45, not at the day you name them.
- Confirm the count with your intermediary and CPA before you send the notice; the DST backup approach is in using DSTs as backups.
Related questions
Is the 200% measured against my net proceeds or my sale price?
Against the fair market value of what you sold, on the date of transfer. Your mortgage payoff and closing costs do not shrink it.
If I name only three trusts, does leverage matter?
Not for identification. The three-property rule ignores value entirely, so three leveraged trusts of any size are fine; value matters again only for the debt and equity tests of full deferral.
Why put a zero cash flow trust on the list at all?
Usually to replace debt you paid off at closing with a small slice of proceeds. How a trust's loan counts toward that is covered in whether a DST's loan counts as replacement debt.
If one trust fills up, can I swap in another after day 45?
No. After midnight on day 45 you can acquire only what was on the list, which is why naming a backup within the cap matters.
Does closing one trust inside the 45 days change the math?
Property received before day 45 is treated as identified and counts in the totals, so it uses part of your three names or part of your 200% room.
Sources
Checked against these publications on September 30, 2026. Rules and figures change; confirm the current version with your CPA or attorney before you act. This page is general information, not tax or legal advice.