Thinking of selling an investment property? Before you hand over thousands of dollars in capital gains taxes, you need to hear this. Because there’s a powerful, legal way to keep more of your equity working for you—and too many property owners overlook it.
I’m Steve Depoe, Realtor with The Rose Realty Team here in Denton County, Texas. And if you’re planning to sell an investment property this year, I want to help you protect your profits, avoid unnecessary taxes, and walk away with a strategy—not just a sale.
Here’s the reality: when you sell an investment property that’s appreciated in value, the IRS expects you to pay capital gains tax on the profit. Depending on your tax bracket and how long you’ve owned the property, that could easily be tens of thousands of dollars. And if you’ve also claimed depreciation over the years, there’s a separate recapture tax you’ll owe on that too.
But what if there was a way to sell and reinvest—without paying those taxes right away?
That’s where a 1031 Exchange comes in. It’s one of the most powerful tools available to real estate investors. It lets you defer paying capital gains taxes by reinvesting the sale proceeds into another investment property. Instead of shrinking your buying power, you get to roll that equity into a new asset—and keep it working for you.
Let’s take an example. Say you own a rental property here in Denton County that’s increased in value by $150,000 since you bought it. A traditional sale could leave you with a tax bill of $30,000 or more. But if you do a 1031 Exchange and reinvest that money into a new property of equal or greater value, that tax bill is deferred. You keep the full $150,000 in play—earning income and building more wealth.
This isn’t just a tax trick—it’s a smart long-term strategy. I’ve helped clients here in North Texas upgrade from single-family rentals to multi-units, shift into stronger cash-flow markets, or trade high-maintenance properties for newer, low-effort investments. All of it—tax deferred.
Now, it’s important to know: this strategy isn’t automatic. There are very specific rules. You have to identify your replacement property within 45 days of the sale—and close within 180 days. You also can’t touch the sale proceeds. The funds have to be held by a qualified intermediary. If any of these steps are missed, the exchange is invalid—and the taxes are due.
That’s why it’s so important to plan ahead. If you’re thinking of selling, don’t wait until your property’s under contract. I help my clients set up a strategy before we list the home—so we know exactly how the exchange will work, who’s handling the funds, and what properties we’ll target for reinvestment.
One more thing to consider: a 1031 Exchange isn’t just a one-time deal. You can repeat it over and over. Some investors roll their gains forward for years—building bigger portfolios while deferring taxes the whole way. And when that property is eventually inherited, your heirs may receive a step-up in basis, which could eliminate the tax bill altogether.
So if you’re sitting on a property with strong equity, and you’ve been dreading the tax hit that comes with selling, now you know—you have options.
I’m Steve Depoe with The Rose Realty Team in Denton County. I specialize in helping local investors and property owners make smarter sales, preserve equity, and build long-term wealth. If you’re planning to sell in 2025, don’t let capital gains sneak up on you.
Contact me today, and let’s build a strategy that puts your equity to work—on your terms.
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