Is a 1031 exchange worth it in Texas?

Yes in most cases. Texas has no state capital gains tax, but federal capital gains plus depreciation recapture can still equal 25-35% of the total gain. A 1031 exchange lets you reinvest the full proceeds instead of losing that percentage to tax.

Do you need to be physically in Texas to use Leah Badach as your QI?

No. As a qualified intermediary, I facilitate 1031 exchanges nationwide. The closing agent at your property's local title company handles the in-person elements; I coordinate the exchange structure, documents, and fund movement from my office.

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1031 Exchange in Texas

Texas has no state capital gains tax — the only tax layer on exchanges here is federal. Texas is one of the most active 1031 markets in the country, with Dallas, Houston, Austin, and San Antonio metros all drawing significant exchange capital from higher-tax states.

Certified Exchange Specialist· 5,000+ exchanges facilitated· $1B+ in exchange funds handled

Texas Cap Gains Tax

Day ID Window

180

Day Exchange Window

$1B+

Facilitated

Texas's state tax picture

Texas is one of the most favorable 1031 exchange environments in the country because there is no state capital gains tax. The only tax layer on a property sale here is federal, which means:

Federal long-term capital gains at 0%, 15%, or 20% depending on income
Depreciation recapture at a flat 25% on depreciation taken
Net Investment Income Tax (NIIT) at 3.8% for higher-income investors

A 1031 exchange defers all of that. No state-level deferred-gain tracking or clawback issues apply in Texas.

Major markets I serve in Texas

Active 1031 exchange work across Houston, Dallas, Austin, San Antonio, and Fort Worth. Common transaction types:

Residential rentals exchanging into larger multifamily (scaling investors)
Commercial buildings exchanging into passive DST interests (tired landlords)
Single properties diversifying across multiple smaller replacements
Multiple small properties consolidating into one larger institutional asset

How a 1031 exchange works for Texas investors

The federal 1031 mechanics are identical everywhere in the US, but coordination with local attorneys, title companies, and closing agents matters:

Engage a qualified intermediary at least 2 weeks before your sale closing. I'll coordinate with your Texas attorney and title company.
Close your sale. Proceeds wire directly from closing to the exchange account. You never touch them.
Identify replacements within 45 days. Can be Texas properties or out-of-state. Written identification delivered to me.
Close your replacement within 180 days. I wire funds to the replacement's closing. You take title.
File Form 8824 with your tax return.

See the complete 1031 exchange timeline for deadline details.

Why work with a Certified Exchange Specialist

The CES designation is the highest credential in the qualified intermediary industry. Requirements include:

Minimum 5 years of full-time experience as a QI
1,000+ exchanges personally handled
Passing the Federation of Exchange Accommodators certification exam
Ongoing continuing education and adherence to the FEA Code of Ethics

For Texas investors, this means you're working with a QI who has seen edge cases, handled audits, and navigated the kinds of structural questions that trip up less-experienced intermediaries.

Tools to run your numbers

1031 Exchange Calculator — Estimate your tax deferral
Capital Gains Calculator — See what you'd owe without a 1031
Depreciation Recapture Calculator — Quantify your recapture exposure

Frequently asked questions

Is a 1031 exchange worth it for Texas investors?

In most cases yes. Texas has no state capital gains tax, but federal capital gains plus depreciation recapture can still total 25-35% of the gain. A 1031 defers every dollar.

Can I 1031 exchange Texas property into another state?

Yes. Federal 1031 rules allow exchange into any US property. Texas doesn't impose special restrictions on out-of-state replacements.

Do I need a Texas-based qualified intermediary?

No. QIs work nationally. What matters is credentials, fund segregation, and experience with your deal type. I work with Texas investors regularly, coordinating with your local attorney and title company.

How long does a Texas 1031 exchange take?

Federal rules give you 180 days from sale closing to complete the exchange, with 45 days to identify replacements. Most Texas exchanges close in 60-120 days end-to-end.

What's the minimum deal size?

No statutory minimum. The math typically makes sense when tax deferred exceeds the QI fee by 10x or more — practically this means deals with $20k+ in tax savings. Run your numbers on the calculator.

Other South states

Start your Texas 1031 exchange

30-minute consultation. I'll walk through your specific property, identify any Texas-specific issues, and quote the exchange fee.

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