Texas 1031 Qualified Intermediary · Midland & Dallas

What Is a 1031 Exchange?

A 1031 exchange lets you sell investment or business real property and buy other “like-kind” real property without paying capital gains tax on the sale right away. It’s named for Section 1031 of the Internal Revenue Code. The tax isn’t forgiven. It’s deferred into the new property, and you can repeat the process as many times as you like.

How Much Tax Can a 1031 Exchange Defer?

When you sell an investment property at a gain, you can owe:

federal long-term capital gains tax of up to 20%
depreciation recapture of up to 25% on depreciation you’ve taken
the 3.8% net investment income tax, for many investors
state income tax in states that have one (Texas does not)

A properly structured exchange defers all of that, so the full equity goes into the next property instead of to the IRS.

What Property Qualifies?

Since 2018, only real property qualifies. Both the property you sell and the property you buy must be held for investment or for use in a trade or business. “Like-kind” is broad. Almost any U.S. investment real estate can be exchanged for any other U.S. investment real estate, for example:

a rental house for an apartment building
raw land for a commercial building
a farm or ranch for a retail center
oil, gas or mineral interests that are real property under state law for a rental property (see mineral rights exchanges)

What Doesn't Qualify?

your primary residence
property held mainly for resale, such as fix-and-flips or developer inventory
personal property such as equipment, vehicles, aircraft or artwork (no longer eligible after 2017)
stocks, bonds, notes and partnership interests
U.S. property exchanged for foreign property, or the reverse

The Basic Requirements

Use a qualified intermediary. You can’t receive or control the sale proceeds. The QI holds them.
Identify replacement property within 45 days of closing the sale.
Close on the replacement property within 180 days of the sale, or by your tax return due date (including extensions), whichever comes first.
Keep the same taxpayer. The person or entity that sells has to be the one that buys.
Reinvest everything to defer everything. Buy property of equal or greater value, reinvest all net proceeds, and replace any debt that was paid off. Cash or debt relief you keep is called “boot” and is taxable.

See the details in 1031 Exchange Rules and the 45- and 180-day timeline.

Types of 1031 Exchanges

Delayed (forward) exchange: sell first, then buy. This is the most common type.
Reverse exchange: buy the replacement before selling the old property. The new property is “parked” with an exchange accommodation titleholder.
Improvement (build-to-suit) exchange: exchange funds pay for improvements to the replacement property before you take title.
Simultaneous exchange: both closings happen on the same day.

Why Use 1031 Ventures as Your Qualified Intermediary?

Donna Cowdrey has completed thousands of 1031 exchanges totaling over $36 billion. Our team includes an attorney, a CPA and a bank relations lead. Exchange funds sit in a qualified escrow account at a federally insured bank. We’re especially experienced with Texas real estate and oil, gas and mineral interests.

Start an Exchange or call 432-934-1479.

Ready to Start Your 1031 Exchange?

Call before your sale closes. A qualified intermediary has to be in place first.

This page is general information, not tax or legal advice. Talk with your own tax and legal advisors before you sell.

Qualified intermediary for 1031 exchanges of investment real estate, land, and oil, gas & mineral interests. Exchange funds are held in a qualified escrow account at a federally insured bank.