1031 Exchange & Closing

What Is a 1031 Exchange?

A 1031 exchange, named after Section 1031 of the Internal Revenue Code, allows real estate investors to sell an investment property and defer federal capital gains taxes by reinvesting the proceeds into a like-kind replacement property. Texas does not have a state capital gains tax, making 1031 exchanges particularly advantageous for Texas investors. Strict IRS timelines apply - the replacement property must be identified within 45 days and closed within 180 days of the sale.

How Cottonwood Title Supports Your 1031 Exchange

A successful 1031 exchange requires careful coordination between the seller, buyer, Qualified Intermediary (QI), lender, and title company. Cottonwood Title & Escrow works closely with your QI to ensure the closing documents, escrow instructions, and disbursements are structured correctly to preserve the tax-deferred status of your exchange. We understand the IRS requirements and ensure nothing at the closing table puts your exchange at risk.

Forward, Reverse & Improvement Exchanges

We provide closing support for all types of 1031 exchanges, including forward exchanges (standard), reverse exchanges (where the replacement property is purchased before the relinquished property is sold), and improvement exchanges (where improvements are made to the replacement property before the exchange is completed). Each type has specific documentation requirements, and our team is experienced in handling them all.

Serving Texas Real Estate Investors

Whether you are exchanging a rental property in Houston, a commercial building in Dallas, agricultural land in Central Texas, or an investment portfolio across multiple counties, Cottonwood Title & Escrow has the experience and underwriter relationships to support your 1031 exchange closing from start to finish.