1031 Exchange Guide | Infinity Family Properties

01

🔄 WHAT IS A 1031 EXCHANGE?

Defer the tax, keep the equity working

A 1031 exchange is named for Section 1031 of the Internal Revenue Code. In plain English: when you sell real property that you've held for investment or business use and reinvest the proceeds into another like-kind property, the federal capital gains taxes you'd normally owe on the sale are deferred — not forgiven. Your tax basis carries into the new property, and the tax comes due at a future taxable sale unless you exchange again.

Why investors love it: the money that would have gone to taxes stays in the deal, compounding in a larger or better-performing property. Sell a tired rental, roll the full equity into a stronger asset in the San Antonio–Austin corridor, and your portfolio grows on pre-tax dollars.

What qualifies: real property held for productive use in a trade or business, or for investment. What doesn't: your personal residence, and property held primarily for resale — a quick fix-and-flip is dealer property, not exchange property.

02

📏 THE RULES THAT MATTER

Non-negotiable, all of them

Like-kind is broad — Almost any real property can exchange for any other real property: an apartment building for raw land, a rental home for a retail strip. Both sides must be held for investment or business use, and the property must be in the United States.
45-day identification window — Within 45 calendar days after your sale closes, you must identify your replacement property in writing to your qualified intermediary. Miss it, and the exchange fails.
180-day exchange period — You must close on the replacement property within 180 calendar days of the sale — or by your tax return due date for that year, whichever comes first.
A qualified intermediary (QI) is required — The QI holds your sale proceeds between the two closings. If the money touches your hands or your account — even briefly — the IRS treats it as received, and the deferral collapses.
Trade equal or up to defer it all — To defer 100% of the tax, the replacement must cost as much or more, and all equity must roll in. Any cash you take out, or debt relief you don't replace, is called "boot" — and boot is taxable.
Same taxpayer — The person or entity that sells the old property must be the one that buys the new one.
The deadlines are hard — They run on calendar days — no extensions for weekends or holidays (declared disaster relief aside). There is no "substantial compliance" grace period.

03

⏱️ THE DEADLINES TABLE

Two clocks, both unforgiving

Milestone	When	Notes
Engage your qualified intermediary	Before the sale closes	The exchange agreement must be in place before closing — a QI cannot be added after the fact.
Sale of relinquished property closes	Day 0	Both clocks start at this closing. Proceeds go directly to the QI.
Identify replacement property	Day 45	Written identification delivered to the QI. Most exchangers use the 3-property rule (identify up to three properties of any value) or the 200% rule (identify more, as long as their combined value doesn't exceed 200% of what you sold).
Close on replacement property	Day 180	Or your tax return due date for the sale year, whichever is earlier. This is the hard finish line.

⭐ The practical takeaway: by the time your sale closes, you should already know what you want to buy. Smart exchangers build the shopping list first — which is exactly the pipeline work in section 05.

04

⚠️ COMMON MISTAKES

How exchanges actually die

Hiring the QI after the sale closes — The single most fatal error. Once you've closed and taken the proceeds, no paperwork can retroactively turn it into an exchange. The QI comes first — before listing, ideally.
Missing Day 45 because no pipeline was ready — Forty-five days sounds generous until you're touring properties in week five with prices moving. Investors who identify calmly are the ones who started shopping before they sold.
Touching the money — Proceeds routed to you "just for a weekend," or a seller credit wired to your account at closing, can be constructive receipt — taxable, and fatal to the exchange.
Buying down or taking cash out — A cheaper replacement property or cash back at closing creates boot. Sometimes that's a deliberate, acceptable tax cost — but it should never be a surprise.
Trying to exchange the wrong property — A personal residence, a property bought to flip, or a vacation home with heavy personal use doesn't qualify the way a true investment property does.
Assuming every state's rules match — Texas has no state income tax, but if the property you're selling sits in a state that does, that state has its own exchange and reporting rules. Your CPA needs to know both ends of the trade.

05

🤝 HOW WE HELP

The brokerage's role in your exchange

Identification pipeline in the corridor. Before your 45-day clock starts, we build a working list of replacement candidates across San Antonio, San Marcos, New Braunfels, Kyle, and Buda — rentals, small multifamily, and other income properties matched to your exchange equity and return targets, each one pre-screened with the numbers discipline from our Investor Hub.

Timeline discipline. Day 45 and Day 180 get tracked like report dates — with buffer built in for inspections, appraisal, and lender conditions, so a slow week at a title company never becomes a failed exchange.

QI coordination. We work alongside your qualified intermediary, your CPA, and your lender — including DSCR financing where it fits — so every party is working the same clock and the same identification list. Buying the replacement is a purchase like any other we run; the exchange structure around it is your QI's and CPA's craft, and we keep everyone synchronized.

Screening a candidate replacement? Run it through the Rental Property Calculator first — then bring it to your consult and we'll pressure-test it together.

This guide is educational information only — it is not tax, legal, or financial advice, and it is not a substitute for advice about your specific situation. 1031 exchange rules are strict, technical, and fact-specific, and they change. Before you sell, consult a CPA, a real estate attorney, and a qualified intermediary, and have them structure your exchange from the start.

Infinity Family Properties & Associates, 15126 Sirius Circle, San Antonio, TX 78245. 737-392-2812

06

FREQUENTLY ASKED QUESTIONS

1031 exchanges, answered

Can I exchange a rental house for raw land, or a duplex for a retail property?

Generally, yes. For real estate, "like-kind" is interpreted broadly — nearly any property held for investment or business use can be exchanged for any other, as long as both are in the United States. A rental home for land, an apartment building for a small retail strip — the use category matters far more than the property type. Your CPA and QI confirm your specific pairing before you commit.

What happens if I miss the 45-day identification deadline?

The exchange fails. Your proceeds are released to you after the identification period ends, and the sale is taxed as a normal sale. There is no extension and no late-identification cure — which is why we build your candidate pipeline before your sale ever closes.

Can I buy the replacement property first and sell mine after?

That's called a reverse exchange, and it exists — but it's more complex and more expensive, because an exchange accommodation titleholder has to hold one of the properties for you, and strict rules and timelines still apply. It must be structured by your QI before either transaction moves. Talk to us and your QI early if your ideal replacement won't wait for your sale.

Can I eventually move into a property I bought in a 1031 exchange?

Possibly, down the road — but intent is everything. At the time of the exchange, the replacement must be acquired and held as an investment property. Converting it to personal use too soon, or with a paper trail showing that was always the plan, can unravel the deferral. If a future move-in is part of your thinking, raise it with your CPA and attorney before the exchange, not after.

Does Texas add its own 1031 rules?

Texas has no state income tax, so there's no Texas-level capital gains deferral to manage — the federal rules in this guide control the exchange. If the property you're selling is in another state, that state's tax and reporting rules can still apply to you. One more reason your CPA belongs in the conversation from day one.