1031 Exchange Texas
Sell your investment property and reinvest in Texas—without paying capital gains tax right now.
What Is a 1031 Exchange?
A 1031 Exchange comes from Section 1031 of the IRS tax code. It allows you to sell one property and buy another of “like kind.” When done right, you don’t have to pay capital gains tax on the sale.
Let’s say you sell a rental home in Austin and use the profit to buy a small retail space in Dallas. If both properties are for business and you follow the rules, you don’t pay tax right now
This lets you grow your portfolio faster and keep more of your cash working.
1031 Exchange Texas – Keep More of Your Investment Working for You
If you’re selling an investment property in Texas, there’s a way to avoid a big tax bill – 1031 Exchange.
A 1031 Exchange lets you sell one property and buy another without paying tax right away. This isn’t a loophole. It’s a long-standing IRS rule used by smart investors to grow faster.
In Texas, a 1031 Exchange helps you keep more money and grow your real estate investment.
Why Choose a 1031 Exchange in Texas?
Texas is one of the best places in the country for real estate investors. Here’s why:
- No state income tax – You already keep more of your money here.
- Strong property demand – Cities like Houston, Austin, and Dallas are booming.
- Flexible market – There’s a wide range of property types to choose from.
- Investor-friendly laws – The rules in Texas favor business owners and landlords.
With all these benefits, it’s clear why investors pick Texas to grow their property plans.
What Kind of Property Qualifies?
Not just any property can be used in a 1031 Exchange. The rule says the property must be “like-kind.” It just means you must use both properties for business or investment—not personal use.
Here are a few examples that qualify:
- Rental homes
- Commercial buildings
- Land used for business
- Warehouses
- Office space
You can sell a duplex and buy an office. You can sell a strip mall and buy land. As long as both are for investment, it usually works.
Primary homes and vacation houses you use personally do not qualify.
How a 1031 Exchange Works in Texas
It is easy to do a 1031 Exchange but there are some rules. A general overview is:
- Sell your investment property.
- Use a Qualified Intermediary (QI) – This is someone who holds the money for you. You can’t touch the sale funds.
- Identify new property within 45 days of your sale.
- Close on the new property within 180 days of the sale.
- Use the full proceeds to avoid any taxes.
Deadlines are strict, so it is best to be highly organized. Having an experienced Texas 1031 exchange firm guide you makes a huge difference.
Want to explore a different approach? You can also learn about the Reverse 1031 Exchange if you’re buying before you sell.
1031 Exchange vs Regular Sale – What’s the Difference?
Let’s say you are selling a rental and you make a net $100,000 profit. In a normal sale, you must pay 15–20% in capital gains tax. That is $15,000 or more to the IRS.
But with a 1031 Exchange, you can use that full $100,000 to buy your next property. No tax bill hits you now. Your investment keeps growing.
Here’s a quick look at the difference:
| Feature | 1031 Exchange | Regular Sale |
|---|---|---|
| Pay tax right away? | No – You defer capital gains taxes. | Yes – You pay taxes on the profits now. |
| Reinvest full amount? | Yes – You can use all your proceeds to buy another property. | No – Some of your money goes to taxes, so you reinvest less. |
| Strict deadlines? | Yes – You must follow IRS deadlines (like 45 days to identify new property, 180 days to close). | No – You can buy and sell on your own timeline. |
| IRS-approved? | Yes – It’s a legal, tax-deferral strategy under IRS code Section 1031. | Yes – Regular sales are also fully legal and IRS-compliant. |
If you want to build wealth over time, a 1031 Exchange helps you stay in control.
Looking for a Texas 1031 Exchange Company? Here’s What to Know
Choosing the right team matters. A small mistake could mean a big tax bill.
A reliable 1031 Exchange company in Texas should:
- Handle all paperwork
- Keep your money safe in a separate account
- Remind you of deadlines
- Answer questions clearly
- Know the IRS rules inside and out
You don’t need to be a tax expert. You just need the right partner guiding you through it.
What Is the 5-Year Rule in a 1031 Exchange?
Want to live in your new property one day? The IRS has rules you must follow.
The 1031 Exchange 5-Year Rule says you need to rent the property for a while—typically two years—before converting it. After that, you should hold it for at least five years total before selling it again to avoid taxes.
Want the full breakdown? Read 1031 Exchange 5 Year Rule.
Start Your 1031 Exchange in Texas Today
Every investor has a different goal. Maybe you want more cash flow. Maybe you want to grow your business. Or maybe you’re planning for retirement.
Whatever your plan is, a Texas 1031 Exchange gives you the tools to get there faster—without losing a big chunk to taxes.
It’s your money. Keep it working for you.
Ready to get started? Let’s talk about your 1031 Exchange.
Want to learn more about your 1031 exchange options in Florida?
Schedule a free consultation today. Let’s put your investment money to work—without losing it to taxes.
Common Questions About 1031 Exchanges in Texas
Can I live in the new property?
Not right away. It must be rented for a while first.
What happens if I miss the 45-day or 180-day deadline?
You’ll owe the full capital gains tax. That’s why a qualified team helps.
Can I use part of the money for personal use?
Yes, but you’ll pay taxes on that portion.
How many times can I do this?
There’s no limit. Many investors use 1031 Exchanges over and over.