Investor Intelligence · November 2026
The short answer: A 1031 exchange lets you sell investment real estate and defer capital gains taxes by buying replacement property of equal or greater value. You must identify the replacement within 45 days of closing your sale and close on it within 180 days. For owners of 78704 rentals and teardown lots that have appreciated sharply, it can be one of the most valuable tools available, if the timeline is planned before the sale.
We're real estate brokers, not tax advisors, so treat this as a working overview. Your CPA and qualified intermediary make the final calls.
Plan Your ExchangeCall (512) 608-8811
45 DAYS To Identify From your sale closing | 180 DAYS To Close Same start date; the clocks overlap | QI Holds the Funds Arranged before your sale closes | BOOT Is Taxable Cash kept or debt not replaced |
Who in 78704 Uses 1031 Exchanges
Three kinds of sellers come up most often:
- Long-time landlords holding an older rental in Zilker, Bouldin Creek or Travis Heights, often bought for a fraction of today's land value
- Land holders who bought a teardown lot as an investment and are ready to sell to a builder
- Small multifamily owners trading up from a duplex to a larger property, or trading out of management-heavy assets
A primary residence generally doesn't qualify. The property must be held for investment or business use.
The Rules That Matter Most
The Two Clocks
- 45 days from your sale closing to identify replacement properties in writing
- 180 days from that same closing to close on the replacement
The clocks run at the same time, and they don't stop for holidays. A sale that closes in mid-December runs its identification window through late January, which is one of the slowest stretches of the Austin market.
Like-Kind Is Broad
For real estate, like-kind is broad. A 78704 rental house can be exchanged for a fourplex, a commercial building or land, as long as both are held for investment or business use.
Equal or Greater Value, All Proceeds Reinvested
To defer all of the gain, you generally buy replacement property of equal or greater value and reinvest all net proceeds. Cash you keep, or debt you don't replace, is called "boot" and is typically taxable.
A Qualified Intermediary Holds the Money
You can't touch the sale proceeds. A qualified intermediary holds them between closings. This needs to be arranged before your sale closes, not after.
Where 78704 Exchanges Go Wrong
Selling Before Having a Target
The 45-day window is short. In a submarket where good properties trade quietly, waiting until after closing to start looking is the most common mistake. We start the replacement search while the relinquished property is still being marketed.
Underestimating the Replacement Price
The math to watch: A teardown lot that sold for $900K needs a $900K-plus replacement to defer fully. Some investors find that the property they want costs less, and the difference becomes taxable.
Ignoring the Holiday Calendar
The Austin market slows from mid-November through late January. If your sale closes in that window, identification will happen when inventory is thinnest. Timing the sale for spring or early fall can give you more choices.
Selling investment property in 78704?
Start the replacement search before you list. We will coordinate with your CPA and intermediary so the 45-day window opens with real options in hand.
How We Run an Exchange for a Client
- Value the relinquished property as land and as a home, so you know your realistic number and the amount you'll need to reinvest.
- Coordinate the team early: your CPA, a qualified intermediary and, if needed, a lender.
- Build the replacement list before listing, including off-market options in our network.
- Sequence the closings so identification happens with real choices in hand.
- Negotiate both sides with the exchange deadlines in mind, so a seller can't use your clock against you.
Reverse Exchanges
If you find the replacement before you've sold, a reverse exchange may be an option. It's more complex and more expensive, and it requires an exchange accommodation titleholder. Talk to your intermediary early if this is your situation.
The Davis Agency Track Record
$50M+ Closed with Developers | 20+ Off-Market Lots Sourced | 30+ New Construction Projects |
Based in Bouldin Creek, in the heart of 78704, The Davis Agency represents luxury sellers and buyers, builders, developers and investors across Barton Hills, Zilker, Bouldin Creek and Travis Heights. Broker Derrik Davis lives in Barton Hills and built his own home there.
Frequently Asked Questions
What are the 1031 exchange deadlines?
You have 45 days from the sale closing to identify replacement property and 180 days to close on it.
Can I exchange a 78704 rental house for a multifamily property?
Generally yes. Real estate held for investment is like-kind to other investment real estate.
Does my Austin home qualify for a 1031 exchange?
A primary residence generally doesn't. Investment and business property does.
Do I need a real estate agent for a 1031 exchange?
You need one who can sell your property and find the replacement within the deadlines. The Davis Agency coordinates both sides for investors in central Austin.
Related Reading from The Davis Agency
→ Best Real Estate Agent for Investors in Austin
→ Sell, Hold, or Rent: A Decision Framework for Austin Luxury Owners
→ The 78704 Land Value Report: What Infill Lots Are Actually Worth
Plan the Exchange Before the Sale
If you own investment property in 78704 and are weighing a sale, we can help you map the replacement search before the clock starts.
Book a Private ConsultationCall (512) 608-8811
Derrik Davis · Broker/Owner, The Davis Agency · CLHMS Certified · TREC License #558841 · Serving 78704 and the greater Austin luxury market since 2006. This article is general information, not tax or legal advice. Work with your CPA and a qualified intermediary before structuring any exchange.
