If you own a rental house, a small apartment building or land you hold as an investment in Dallas–Fort Worth, a like-kind exchange under Section 1031 of the Internal Revenue Code can let you sell and buy replacement property while deferring the gain. The rules are strict and the deadlines don't bend, so it pays to understand the timeline before you list. This guide summarizes what the IRS publishes about 1031 exchanges and how the timing fits a typical North Texas sale and purchase.
What can be exchanged
Since the Tax Cuts and Jobs Act, Section 1031 applies only to exchanges of real property. The change took effect for exchanges beginning after December 31, 2017. Equipment, vehicles and other personal or intangible property no longer qualify.
- Both properties must be held for investment or for use in a trade or business. The IRS lists buildings, land and rental property as examples that may qualify.
- Real property generally is like-kind to other real property, whether it is improved or unimproved. A rental house can be exchanged for land, or a small commercial building for a fourplex, as long as both are held for investment or business use.
- Your home doesn't qualify. Real property used for personal purposes, such as your residence, is excluded. The IRS also says a second home or vacation home used primarily for personal purposes doesn't qualify.
- Property held primarily for sale doesn't qualify, such as homes bought to fix up and resell.
- U.S. and foreign real property are not like-kind, so a Texas rental can't be exchanged for property outside the United States.
The two deadlines
Most exchanges are deferred: you sell first and buy later. Two clocks start the day you transfer the property you are giving up.
| Deadline | What must happen |
|---|---|
| 45 days | Identify the replacement property in writing. |
| 180 days, or your tax return due date (including extensions) if earlier | Receive the replacement property. |
The 45-day identification
According to the Form 8824 instructions, identification has to be in a document you sign, or a written agreement signed by all parties to the exchange. It must describe the property clearly, for example by legal description or street address. It must also be delivered within 45 days to the person required to transfer the replacement property to you, or to another person involved in the exchange who is not a disqualified person. If you actually receive the replacement property within the 45 days, the identification requirement is treated as met.
The 180-day completion
You must receive the replacement property by the 180th day after the transfer, or by the due date of your tax return for that year, including extensions, whichever comes first. A sale late in the year can run into the return due date before day 180, which is one reason to plan the timeline with your tax professional early.
Qualified intermediaries and the cash
Most deferred exchanges use a qualified intermediary, who holds the sale proceeds and handles the transfers. The IRS warns that taking control of cash or other proceeds before the exchange is complete may disqualify the whole transaction. Related parties and your own agents can't serve as your qualified intermediary; the IRS calls them disqualified persons. Line up the intermediary before closing on the sale, not after.
If you receive money or other property that isn't like-kind as part of the exchange, gain is generally recognized up to that amount. Exchanges with related parties have extra rules: if either side disposes of the exchanged property within two years, the deferred gain may become reportable unless an exception applies. Exchanges are reported to the IRS on Form 8824.
How the timeline fits a DFW sale and purchase
- Before you list: talk with your CPA, choose a qualified intermediary and decide what kind of replacement property you want, such as single-family rentals, a small multifamily building or land.
- While the sale is under contract: start touring replacement properties so you are ready to identify quickly. Our October 2026 DFW market update covers current inventory trends.
- At closing on the sale: proceeds go to the intermediary, and both clocks start.
- By day 45: deliver your written identification.
- By day 180 (or the earlier return due date): close on the replacement property.
Texas purchase contracts include option periods, financing deadlines and title review. Build those into your schedule so a delay on the purchase doesn't push you past the exchange deadlines.
Next steps
When you are ready to look at replacement property, browse the live DFW property search, or contact our team to plan a sale and purchase around your exchange timeline. We coordinate with your CPA and intermediary; we don't give tax advice, and we can't promise any tax result or investment return.
Frequently asked questions
What is the 45-day rule in a 1031 exchange?
You must identify the replacement property in writing within 45 days after you transfer the property you are giving up. The IRS requires a signed document that clearly describes the property, delivered to a party to the exchange who is not a disqualified person.
Is the 1031 exchange deadline 180 days?
You must receive the replacement property within 180 days of the transfer, or by the due date of your tax return including extensions, whichever is earlier.
Can I do a 1031 exchange on my home or vacation home?
Generally no. Real property used for personal purposes, such as your residence, doesn't qualify, and the IRS says a second home or vacation home used primarily for personal purposes doesn't either. Ask a tax professional about your situation.