Texas 1031 Exchange: What the IRS Says About Like-Kind Real Estate
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Last updated November 14, 2026. Citations come from the Texas statutes and official agency pages linked in Sources. Where we could not confirm something on an official page, we say so.
Under Section 1031, an exchange of real property held for business or investment solely for other business or investment real property of like kind generally defers recognition of gain or loss. Texas has no state income tax, so the issue is federal.
This guide uses the IRS real estate tax tips page and Publication 523. We could not confirm the 45-day and 180-day deadlines from an official page we opened, so we do not state them.
What the IRS page says
- A like-kind exchange of real property used for business or held for investment, solely for like-kind business or investment property, generally results in no recognized gain or loss. If you also receive other property or money, gain is recognized to that extent, and a loss cannot be recognized.
- After the Tax Cuts and Jobs Act, Section 1031 applies only to exchanges of real property. Property held primarily for sale still does not qualify.
- Real properties are generally like-kind whether improved or unimproved. Real property in the United States is not like-kind to real property outside the United States.
- Report the exchange on Form 8824, Like-Kind Exchanges.
Your home is a separate question
A home acquired through a like-kind exchange is automatically disqualified from the home sale exclusion in Publication 523. See Texas capital gains on a home sale for the exclusion rules.
What we could not confirm
- Identification and exchange deadlines, qualified intermediary rules and any Texas-specific treatment. The IRS newsroom page we tried returned an error, and the page we opened did not state them.
- Whether a particular property qualifies. A tax professional or qualified intermediary should review it before you sell.
If you are selling an investment house and do not plan an exchange, a cash sale can be simple. We buy as-is, including tenant-occupied properties.
How to sell a house in Texas when you own it as an investment
- Talk to a tax professional before you sign anything if you want to attempt an exchange.
- Get a payoff for any mortgage and the amount of any unpaid property tax. Both are paid from the sale proceeds at closing.
- Compare offers on what you net after repairs, commissions and closing costs, not on the headline price.
- If you want a fast, simple closing, ask for a written cash offer. We buy houses as-is, with no repairs and no agent commission. See how we buy houses in Texas.
Texas 1031 exchange FAQ
Does Texas have its own 1031 rules?
We found no Texas-specific page. The Comptroller states Texas has no state income tax, so the federal IRS rules are what we covered.
Does Section 1031 apply to personal property?
After the Tax Cuts and Jobs Act it applies only to real property, per the IRS page.
Does property held for sale qualify?
No. The IRS says real property held primarily for sale does not qualify.
Which form reports an exchange?
Form 8824, Like-Kind Exchanges.
Sources
This guide is general information, not legal or tax advice. Laws, forms and fees change, so confirm details with the official office or a Texas attorney or tax professional.