A 1031 exchange allows you to sell an investment property and defer all capital gains taxes by buying a replacement property. You must identify the replacement within 45 days and close within 180 days. The property must be like-kind (investment to investment). Texas has no state income tax so federal deferral is the main benefit.
How It Works
Sell property, place proceeds with qualified intermediary, buy replacement property within timeline.
Timeline
45 days to identify up to 3 replacement properties. 180 days to close on replacement.
Like-Kind Rules
Any investment property can be exchanged for any other investment property.
Intermediary
A qualified intermediary holds the sale proceeds. You cannot touch the money yourself.
Texas Context
No state income tax means only federal capital gains tax is deferred.