What is a 1031 exchange and how does it work in Texas?
A 1031 exchange lets real estate investors defer capital gains taxes by reinvesting sale proceeds into a like-kind replacement property. In Texas (no state income tax), you defer only federal capital gains. Key rules: identify replacement property within 45 days, close within 180 days, use a Qualified Intermediary, and reinvest equal or greater value. Denise Abrams helps DFW investors execute 1031 exchanges and find replacement properties fast. TREC #613383-B.
IRS Code Section 1031 · Tax Deferral Strategy
1031 Exchange in DFW
Sell your investment property and defer capital gains taxes by reinvesting in a like-kind replacement. Denise Abrams helps DFW investors identify replacement properties within the critical 45-day window.
1031 Exchange Timeline
Day 0
Close on Relinquished Property
You sell your investment property. Proceeds go directly to a Qualified Intermediary (QI) — never to you personally.
Day 1–45
Identify Replacement Property
You have 45 days to identify up to 3 replacement properties in writing. This deadline is strict — no extensions.
Day 46–180
Close on Replacement Property
You must close on the replacement property within 180 days of selling the relinquished property. Both deadlines run simultaneously.
Complete
Defer Capital Gains Tax
If all rules are followed, capital gains taxes are deferred — potentially indefinitely through successive exchanges.
1031 Exchange Rules
Like-Kind Property
Both properties must be "like-kind" — real property held for investment or business use. A single-family rental can exchange for a commercial building, land, or another rental.
Equal or Greater Value
The replacement property must be equal to or greater in value than the relinquished property to defer 100% of capital gains.
Qualified Intermediary Required
You cannot touch the sale proceeds. A QI holds the funds between transactions. Using the wrong QI or touching funds disqualifies the exchange.
45-Day Identification Rule
You must identify replacement properties in writing within 45 days of closing on the relinquished property. No exceptions.
180-Day Closing Rule
You must close on the replacement property within 180 days of selling the relinquished property.
Investment Intent
Both properties must be held for investment or business use — not personal use. Primary residences do not qualify for a standard 1031 exchange.
Important: 1031 exchange rules are complex and the deadlines are absolute. Always consult a qualified tax advisor and a Qualified Intermediary before proceeding. This page is for educational purposes only and does not constitute tax or legal advice.
1031 Exchange FAQ
What is a 1031 exchange in real estate?
A 1031 exchange (named after IRS Code Section 1031) allows real estate investors to defer capital gains taxes when selling an investment property by reinvesting the proceeds into a "like-kind" replacement property. It's one of the most powerful tax deferral strategies available to real estate investors.
How much tax can a 1031 exchange save?
Capital gains taxes on investment property can be significant — federal long-term capital gains (0–20%), Texas has no state income tax, plus depreciation recapture (25%). On a $200,000 gain, you could defer $40,000–$60,000+ in taxes, keeping that capital working in your next investment.
Can I do a 1031 exchange in Texas?
Yes. Texas has no state income tax, which means a 1031 exchange in Texas defers only federal capital gains taxes. This makes Texas one of the most favorable states for 1031 exchanges — you're only deferring federal taxes, not state taxes.
What properties qualify for a 1031 exchange?
Investment and business properties qualify — rental homes, commercial buildings, raw land, multifamily, industrial, and more. Primary residences do not qualify. Both the sold property and the replacement property must be held for investment or business purposes.
Do I need a Qualified Intermediary for a 1031 exchange?
Yes. A Qualified Intermediary (QI) is required by IRS rules. The QI holds the sale proceeds between transactions — you cannot receive or control the funds. Using an unqualified intermediary or touching the funds disqualifies the exchange.
Can Denise help me with a 1031 exchange in DFW?
Absolutely. Denise Abrams has extensive experience with 1031 exchanges in DFW. She helps investors identify replacement properties within the 45-day window, negotiate acquisitions, and coordinate with Qualified Intermediaries. Contact Denise to discuss your exchange.
Need to Find a Replacement Property Fast?
The 45-day clock starts the moment you close. Denise knows the DFW market and can help you identify replacement properties quickly.
Start My 1031 ExchangeDenise Abrams · Texas Real Estate Broker · TREC #613383-B · NB Elite Realty · TREC #592599-BB · Not tax or legal advice — consult a qualified professional.
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