# 1031 Exchange in Texas: Rules, Taxes, and What's Different

> Texas 1031 exchange rules: no state income tax and no transfer tax, the federal deadlines that still govern everything, and how property taxes change the math.

By [Adam Kalimi](https://whosetitle.com/author/adam-kalimi) · Published 2026-07-28 · Updated 2026-07-28

Canonical: https://whosetitle.com/blog/1031-exchange-texas

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Texas is about as friction-free as a 1031 exchange gets. There's no state income tax, so the only gain tax you're deferring is federal — and unlike almost every other state, Texas charges **no real estate transfer tax** either. Sell in Dallas, buy in Houston, and the state's cut of the transaction is zero on both ends.

What's left is the federal rulebook and one Texas-sized underwriting caveat. Here's the picture.

## The federal rules still govern everything

No state income tax means no state conformity questions — a Texas exchange lives entirely under [the federal 1031 rules](/blog/1031-exchange-guide):

- **45 days** to identify replacement property in writing, **180 days** to close, both counted from the day your sale closes. Get your exact dates from the [deadline calculator](/free-tools/1031-exchange-deadline-calculator).
- A [qualified intermediary](/glossary/qualified-intermediary) holds the proceeds from closing to closing.
- Buy equal or greater in both value and debt, or the shortfall is taxable [boot](/glossary/boot-1031-exchange).

Miss a deadline and the sale is fully taxable at the federal level — Texas's friendliness doesn't soften that.

## What Texas doesn't charge

```viz-stats
{
  "items": [
    { "value": "$0", "label": "State income tax on the gain — nothing to defer at the state level" },
    { "value": "$0", "label": "Real estate transfer tax — Texas is one of about a dozen states without one" },
    { "value": "~1.6–2%+", "label": "Effective annual property tax — the tax that actually drives Texas deal math" }
  ],
  "note": "Texas collects at the appraisal district, not the closing table."
}
```

The absence of a transfer tax is a real, if modest, edge: on a $500,000 exchange, a Florida investor pays $3,500 in deed doc stamps and a Texas investor pays nothing. Recording fees of a few hundred dollars still apply.

## The caveat: property taxes are the real tax

Texas funds itself through property taxes, and they're among the highest effective rates in the country. Two things matter for an exchanger:

**Your assessed value resets to reality.** County appraisal districts chase market value, and a recorded sale is evidence. The seller's tax bill tells you what *they* paid — underwrite the replacement at your purchase price times the local rate, or the first appraisal notice will eat the cash flow you modeled.

**Exchanging in from a low-property-tax state changes your operating math.** A California investor trading a 1.1% Prop-13-capped tax bill for a 2% Texas bill on a bigger building can find that the income-tax savings get partially recycled into the appraisal district. The exchange still works — just run the numbers on both lines. (And if you're coming from California specifically, its clawback follows you: see the [California guide](/blog/1031-exchange-california).)

## Working the 45-day window in Texas

Texas metros are deep markets — Dallas–Fort Worth, Houston, San Antonio, and Austin have enormous rental stock, which makes the 45-day identification window more about search speed than scarcity. WhoseTitle covers Texas county records: circle a neighborhood, pull every owner with tenure and equity flags from the county rolls, and build a replacement-property shortlist before your relinquished sale even closes — the strongest position an exchanger can be in.

Before you list, run the [1031 capital gains calculator](/free-tools/1031-exchange-capital-gains-calculator) to see the federal bill you're deferring, and keep the [deadline calculator](/free-tools/1031-exchange-deadline-calculator) output next to your contract dates.

*General information, not tax or legal advice. Entity-owned property can trigger Texas franchise-tax considerations beyond this article — confirm your situation with a CPA and a qualified intermediary.*