1031 Exchange For Houston Real Estate | HoustonProperties

1031 Exchange Houston Explained

Property owners that are looking to sell in Houston, Texas may benefit from a 1031 exchange.  Learn about 1031 tax exchanges here!

The IRS regulation “1031” provides specific tax benefits for homeowners, whereby selling one home and then purchasing another within 180 days, can be treated as an exchange, versus a sale that would be treated as capital gains income.

Exchange Treatment

Normally, once a property is sold, the owner is taxed on the gains (the difference between what the property is sold for vs what you originally bought it for) made from the sale of a property.

Instead, if the property is “exchanged,” the IRS rules allow for the deferral of owed capital gains taxes.

1031 Exchange Houston Rules

The 1031 Tax Exchange rules are outlined in the U.S. tax code and treasury regulations. In order for a property to be eligible for these types of exchanges, the property must fall within specific boundaries. The first rule is that the property that is being exchanged must be “like” property. For instance, any property that is located within the United States is considered “like-kind.”  Property outside of the United States typically can not be included in 1031 exchanges.

Additional rules specify that the property to be acquired must be of equal or greater value than the property that it is being exchanged for.

There is an exception rule within the 1031 Tax Exchange. Certain types of property may be excluded, even if they are located within Houston, or other areas of the United States. These exclusions include: property that is being held for sale for a profit, inventories, stocks, bonds, and notes, other securities or evidence of indebtedness, if the owners are looking at a partnership, and other beneficial interests.

Then there is the exchange component of the 1031 Tax Exchange. For property owners to be eligible for the 1031 Tax Exchange, the property must actually be exchanged, instead of the property being sold and then the owner using the money from the sale of that property to purchase another. That type of transaction would be viewed as a simple sale of property and would not be eligible for a tax exchange.

Arm’s Length Transaction

Another rule written into the U.S. tax code states that any funds from the original sale of property, must not go to the property owner or the property owner’s agent. Instead, they must be given to a qualified intermediary. That qualified intermediary is generally an individual, or company that works exclusively with dealing with 1031 tax exchanges.

They must have no other contact with the owner other than serving as a qualified intermediary for the exchange that is about to take place. The intermediary will be responsible for holding funds related to the exchange and for distributing them as needed. If in the end there are proceeds that are rightfully the owner’s, those funds will be taxed.

1031 Exchange Houston Timelines

In addition to the different rules that accompany a 1031 tax exchange, there are also certain timelines that must be adhered to. There are two timelines specifically that must receive particular attention. The first timeline is the Identification Period.

This refers to the amount of time that a property owner has to find replacement properties that he is interested in purchasing. This time period is within 45 days of selling the original property. The 45 days is 45 days exactly and includes holidays and weekends. This timeline will never be extended and if an owner cannot find replacement properties within that time, the property that had been sold will no longer be eligible for a 1031 tax exchange.

The other timeline property owners must concern themselves with is the exchange period timeline. This refers to the period of time that a property owner selling his property must become owner of another property. The time period for this is 180 days from the time the original property is sold. The time period is over on the date the property is fully relinquished or when the person’s tax return for that current year is due, whichever date comes first.

So while property owners in Houston, Texas may want to further investigate 1031 Tax Exchanges to see if they are eligible tax benefits, it’s important to fully understand this tax code to ensure that you meet all the rules and requirements that will make you eligible.

Search Houston Homes For Sale

Note: the information presented here is accurate at the time of writing, but should not be officially relied upon for specific transactions or considered official tax advice.  Please consult a tax advisor prior to any specific transactions or portfolio changes.

Find Your Perfect Home

Get More Details

Paige Martin

Our Recent Awards

Why We’re Different

  • #1 Keller Williams Realtor in Houston
  • #1 Keller Williams Realtor in Texas
  • #6 Keller Williams Realtor in the U.S.
  • "One of Houston's Top 25 Realtors," Houston
    Business Journal
  • "One of America's Best Realtors," RealTrends.com / WSJ
  • Over $1 Billion in Houston residential home sales
  • We know this market, and this property.
  • We're candid.
  • We'll tell you the "bad' and the "ugly" about any property we show you.
  • Most often, we talk our clients into NOT BUYING.
- Gretchen & Brad Richter- Gretchen & Brad Richter
“We relocated to Texas from out of state 3 years ago, and Paige’s intimate knowledge of Houston neighborhoods, valuations, trends, and pitfalls was simply unmatched. We would never have been able to find our perfect home without her. She was calm and focused when everything seemed most challenging — a true professional and advocate who has become a dear friend. We are grateful to have met her!

Read More

- Peter McGillivray & Jillian Jopling- Peter McGillivray & Jillian Jopling
“Paige demonstrated all qualities you want in a realtor – knowledgeable, attentive, responsive, patient. She put us into our first dream home, and due to that experience, we’ve returned to her time and again for our other real estate needs. You will quickly realize after working with Paige that while she focuses on completing your deal, her endgame is to ensure her clients’ needs are preserved and satisfied.

Read More

- Gail & Ian Mackey- Gail & Ian Mackey
“As first time buyers in the US, we are delighted to have worked with Paige. She is a delight to work with, and I would recommend anyone to enlist her help if you’re looking to either buy or sell a property.

Read More

- Dr. Jen Shroff- Dr. Jen Shroff
“Paige is simply the best. She was patient with us throughout the process and took time to answer all of our questions! She knows so much about the housing market so we felt very confident that we were in great hands!

Read More

- Travis LeConey- Travis LeConey
“Paige has helped my wife and I twice now. I couldn’t think of a better person to have in your corner when buying or selling! She guided us through the process, and made it seem so easy that selling/buying was fun! Paige is a great person, very responsive, and great at what she does. I recommend Paige to all my friends and co-workers. If you are buying or selling in the area Paige covers, give her a call. You won’t regret it!

Read More

- Xavier Refunjol- Xavier Refunjol
“Paige is dedicated, thorough and caring to where you feel you’re their only client. Their best asset is their honesty, based on experience and data. We had a great time buying our first home largely because of them. We would not hesitate to recommend them to anyone.

Read More

- Taylor Lamb- Taylor Lamb
“Paige was wonderful to work with. She was thorough, knowledgeable and patient. I would highly recommend Paige to anyone looking to buy or sell a home.”

Read More

- Jeremy & Lynn Greene- Jeremy & Lynn Greene
“Paige Martin is the best Realtor. She is highly experienced and very knowledgeable. She made our buying experience an enjoyable one, not only for us, but for our daughter, son-in-law and several of our friends. We have bought and sold many houses, and Paige has been the best realtor we have ever worked with. We highly recommend her.

Read More

- Dr. Forrest Roth, MD- Dr. Forrest Roth, MD
“Paige is the best of the best when it comes to real estate! She has bought & sold many properties for us & we couldn't recommend her more highly!

Read More

- Tina Spiller, Chevron- Tina Spiller, Chevron
“I really enjoyed working with Paige on the sale of my townhome. The HAR listing was perfect and went up quickly and the sale was closed within 30 days. I definitely recommend Paige for any real estate transaction.

Read More

Read 100+ Testimonials: LinkedIn for the Best Houston Realtor

Our Commitment


We promise to give you the most candid advice on any property to help you make the best decision for your family.


Having sold over $1 billion of Houston homes, we've seen the good, bad & ugly and can help you avoid problems.


We built a proprietary data analytics package to help give you the best information on any neighborhood, building, or home.


Built over 20 years, our network of experts, technology-driven agents, and database can help you through each step of the process.

Latest Houston Real Estate Stories

Read more Houston real estate updates

Back to Top