For Texas Accredited Investors Selling Investment Property in 2026
Defer Every Dollar of Federal Capital Gains Tax Without Rushing Into the Wrong Replacement Property in One of the Hottest Markets in the Country
Texas has no state income tax and no state-specific 1031 rules. Your only job is getting the federal exchange right and getting into the best possible asset. In a market this competitive, that is harder than it sounds. Breakwater guides accredited investors through every stage of their exchange, from sale strategy through closing day. Even if you are already in conversations with a DST sponsor and think the replacement side is handled.
As Featured In
The Texas Opportunity
You Have the Cleanest Exchange Environment in the Country. Here Is How to Use It.
Texas has no state income tax or capital gains tax on real estate. By extension, the state does not levy capital gains taxes on any real estate transaction. There are no additional 1031 Exchange rules at the state level. Once you fulfill IRS requirements, you are done. No clawback provisions. No mandatory withholding forms. No annual state filings. No FTB equivalent waiting for you years down the road.
That simplicity is an advantage. It is also a specific risk. Investors who mistake a clean exchange environment for a simple one.
Texas is not a monolithic market but a collection of thriving hubs. Dallas-Fort Worth leads the nation in multifamily absorption, Houston anchors the energy and logistics economy, Austin commands tech-driven growth, and San Antonio serves as a hub for healthcare and defense. Most Texas investors selling a property are heavily concentrated in one of those metros. A 1031 exchange is the single most powerful tool available to break that concentration, reposition into institutional-grade assets across multiple markets, and do it without triggering a tax event.
The investors who use it well do not just complete the exchange. They use it to redesign their portfolio. The ones who do not have a plan going in simply defer taxes into the same concentration they were trying to escape.
Breakwater exists to prevent the latter.
The Problem Texas Investors Actually Face
Three Ways a Perfectly Valid Exchange Still Goes Wrong
Over-Concentration in a Single Texas Metro
Your advisor only shows you what is nearby or what their sponsor currently carries.
A diversification strategy lets investors reduce concentration in a single Texas metro by redeploying into multiple regions or property types. Most investors know this is available as a strategy. Most do not execute it because their advisor only shows them what is nearby or what their sponsor currently carries. A sponsor-agnostic nationwide marketplace solves this directly.
Inventory Pressure in a Hot Market
Investors who start searching after closing face a 45-day window in a market where quality assets move fast.
Texas's hot real estate market can make finding suitable replacement properties within the required timeframe challenging. Investors who begin their property search after closing face a 45-day window in a market where quality assets move fast. The investors who start building their replacement shortlist before they list their relinquished property never feel that pressure.
The Debt Match Problem
Getting the match wrong on a $3M exchange can create a six-figure tax bill on an otherwise valid exchange.
To achieve full deferral, investors generally need to acquire replacement property of equal or greater value, reinvest all net equity, and replace equal or greater debt. If you reinvest less equity or reduce debt without replacing it, you may create taxable boot. This catches Texas investors off guard more than any other single issue, particularly those selling highly appreciated properties where the gain is large and the debt is relatively low.
None of these failures are dramatic. They are quiet, avoidable, and expensive. Breakwater plans around all three before your property closes.
The Solution
What a Sponsor-Agnostic 1031 Advisor Actually Does for You
Breakwater is not a DST sponsor. We are a dedicated 1031 exchange advisory firm. We work exclusively for the investor, not the sponsor, and our only job is getting your exchange right and getting you into the right asset.
Here is what that looks like in practice:
Pre-Sale Exchange Strategy
Map your requirements before the 45-day clock starts.
Get your debt and equity requirements mapped to a qualifying replacement property before your 45-day clock starts, even if you are still in the process of listing your Dallas or Houston property and have not engaged a QI yet.
Concentration and Diversification Planning
Break single-market exposure across Texas metros.
Reduce single-market exposure across the Texas metros you are concentrated in and reposition into institutional assets across multiple regions, even if every advisor you have spoken to has only shown you more Texas inventory.
Sponsor-Agnostic Nationwide Inventory
Access every major sector, not just one sponsor's availability.
Access institutional DSTs across every major sector nationwide, even if the only options on your current shortlist came from a single sponsor with availability in one asset class.
Full-Cycle Coordination
Verify debt replacement before identification, not at closing.
Have your debt replacement requirements verified before identification, not discovered as a taxable boot problem at closing, even if your transaction involves a highly appreciated property with a relatively low debt balance.
Get Your Exchange Right in Three Steps
Start Your Free Texas Exchange Analysis
Same-day inventory match based on your position.
Tell us where you are in your transaction. Sold, under contract, or still planning. We review your debt and equity position, your current portfolio concentration by Texas metro, and match you to available inventory across every sector the same day.
We Build Your Replacement Shortlist
Pre-screened DSTs matched before your 45-day clock starts.
Before your 45-day clock starts, we identify pre-screened DSTs that match your exact deferral requirements, reduce your single-market concentration, and coordinate with your CPA and QI so debt replacement is verified before identification, not discovered as a problem after.
Close With Everything Handled
Every step managed through the finish line.
From debt match verification to full closing documentation, we manage every step through the finish line. You close knowing your capital is working harder across a better-structured portfolio, not just deferred into a different version of what you already had.
No obligation. No cost to review your situation.
What You Get Access To
Institutional-Grade Replacement Properties Matched to Your Exchange
Each offering includes full due diligence documentation, debt and equity specifications, and projected cash flow. Everything you need to make a confident identification before your clock expires.
Passco Riverside DST
Sponsor: Passco Companies, LLC
ERP 1031 Industrial Portfolio IV DST
Sponsor: Energy Related Properties (ERP)
Why Not Go Direct?
Advisory-Led vs. Direct-to-Sponsor: What You Are Actually Choosing Between
Inventory
Direct-to-Sponsor
Limited to what that sponsor sells.
Advisory-Led (Breakwater)
Full marketplace across all sectors and markets.
Geographic Diversification
Direct-to-Sponsor
Limited to sponsor's available markets.
Advisory-Led (Breakwater)
Nationwide, matched to reduce your concentration.
Debt/Equity Matching
Direct-to-Sponsor
Your responsibility.
Advisory-Led (Breakwater)
Handled and verified before identification.
Deadline Management
Direct-to-Sponsor
Your responsibility.
Advisory-Led (Breakwater)
Fully coordinated 45/180-day tracking.
CPA/QI Coordination
Direct-to-Sponsor
Your responsibility.
Advisory-Led (Breakwater)
Included, we manage the relationships.
Sponsor Alignment
Direct-to-Sponsor
Works for the sponsor.
Advisory-Led (Breakwater)
Works for you.
Portfolio Fit
Direct-to-Sponsor
One-size-fits-all.
Advisory-Led (Breakwater)
Structured to your specific exchange requirements.
| Feature | Direct-to-Sponsor | Advisory-Led (Breakwater) |
|---|---|---|
| Inventory | Limited to what that sponsor sells. | Full marketplace across all sectors and markets. |
| Geographic Diversification | Limited to sponsor's available markets. | Nationwide, matched to reduce your concentration. |
| Debt/Equity Matching | Your responsibility. | Handled and verified before identification. |
| Deadline Management | Your responsibility. | Fully coordinated 45/180-day tracking. |
| CPA/QI Coordination | Your responsibility. | Included, we manage the relationships. |
| Sponsor Alignment | Works for the sponsor. | Works for you. |
| Portfolio Fit | One-size-fits-all. | Structured to your specific exchange requirements. |
Going direct costs less upfront. Exchanging back into the same market concentration you were trying to escape costs you the entire strategic benefit of the exchange.
The Rules
Before You Sell, Know These
A 1031 Exchange can protect six figures in federal tax liability. One procedural mistake eliminates that protection entirely.
Qualified Intermediary Required
You cannot receive or control the sale proceeds at any point. A QI must be engaged before your relinquished property closes. Do it after and your exchange is disqualified before it begins.
The 45-Day Identification Window
From the day of sale, you have exactly 45 calendar days to identify replacement properties in writing. The IRS offers no extensions and no exceptions. In Texas's competitive market, investors who have not started their identification process before closing often find their best options are already gone.
The 180-Day Closing Rule
Your replacement property must close within 180 days of your sale date. Miss this deadline and the full capital gain becomes taxable immediately.
Full Reinvestment for Full Deferral
To defer 100% of your capital gains, your replacement property must equal or exceed both the value and the debt of your relinquished property. Any shortfall becomes taxable boot. On highly appreciated Texas properties, the debt replacement requirement is the most commonly missed threshold in an otherwise valid exchange.
Depreciation Recapture Is Also Deferred
A properly executed 1031 exchange defers not just capital gains but also depreciation recapture, which the IRS taxes at up to 25%. Both are deferred as long as the exchange is structured correctly and the replacement property qualifies. Both become due if it is not.
Investment Use Required on Both Ends
The replacement property must be held for investment or business use. Texas's strong vacation rental and ranch markets mean this line gets crossed more often here than in most states. A property you intend to use personally, even partially, can disqualify the exchange at the replacement end.
Most Texas investors know rules 1 through 3. Rules 4 through 6 are where exchanges quietly fail, and where Breakwater planning pays for itself.
Credibility
16+ Years. $1.1B+ In Exchanges Guided. Zero Sponsor Allegiances.
Breakwater Capital is a dedicated 1031 exchange advisory firm. We bridge the gap between selling a Texas investment property and securing a tax-deferred, geographically diversified legacy, for accredited investors who want to do more than just complete the exchange.
Josh Chapin
President · 200+ Seminars on 1031 Exchanges
Josh has an extensive background in financial planning, specializing in unique investments and tax planning concepts. Since founding Breakwater Capital, he has developed deep expertise working with high-net-worth individuals and business owners — delivering thoughtful, personalized advice with a common-sense approach to complex strategies.
Series 7, Series 6, Series 63, Series 65, SIE, Life & Health
Supported by a Dedicated Exchange Team
Debbie Bannister
Certified Exchange Specialist · 18+ Years
Monique Wilson Kaiser
Senior Exchange Administrator · Since 1996
Naomi Booker-Abawag
Operations Manager
Taylor Pennington
Exchange Administrator · Since 2003
Experienced Advisory
Decades of collective experience in commercial real estate and tax-advantaged structures, including the portfolio design decisions that make the difference between a completed exchange and a strategically superior one.
Customized Portfolios
We specialize in scaling exchanges, splitting one large Texas sale into multiple DST assets across sectors and geographies to reduce concentration and improve portfolio resilience.
Client-First Philosophy
We work for you, not the sponsor. Our recommendations are built around your exchange and your portfolio, not around what is easiest to move.
As Featured In
Featured Offering
MCG Arden NC Multifamily DST
Sponsor: Madison Capital Group
A Class A garden-style community in a high-growth North Carolina submarket, with strong employment fundamentals and favorable supply dynamics.
Every week you wait to build a replacement shortlist is a week your 45-day window narrows. In Dallas-Fort Worth, Houston, and Austin, quality DSTs with strong debt replacement characteristics move fast. The investors who close into institutional-grade assets are not the ones who searched hardest in the final two weeks. They are the ones who had a shortlist ready before they sold.
Two Ways to Get Started
Still planning your sale?
Request the Breakwater DST Overview. We will walk you through current inventory, show you how debt and equity matching works, and help you build a replacement shortlist before your property ever hits the market.
Already sold or closing soon?
Your 45-day clock may already be running. Call us directly and we will prioritize your file today.
Schedule a ConsultationNo obligation. No cost to review your exchange situation. If Breakwater is not the right fit for your transaction, we will tell you clearly and point you toward who is. Texas gives you the simplest exchange environment in the country. The only decision left is whether you use that advantage to build a better portfolio or just a deferred one.
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IMPORTANT: Our Intent Is Not To Sell Nor Does Our Website Or Content Be Considered An "Offer To Sell" Securities. The Content On Our Website Is Education Purpose Only. Please Consult With An Attorney Or Your Local CPA To Determine If The Securities And Strategies Are Best For You And Determine The Tax Or Legal Consequences Of Any Particular Investment Or Strategy. Any Investment Or Strategy Involves Risk.
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Privacy PolicyThe contents of this communication: (i) do not constitute an offer of securities or a solicitation of an offer to buy securities, (ii) offers can be made only by the confidential Private Placement Memorandum (the "PPM") which is available upon request, (iii) do not and cannot replace the PPM and is qualified in its entirety by the PPM, and (iv) may not be relied upon in making an investment decision related to any investment offering by an issuer, or any affiliate, or partner thereof ("Issuer"). All potential investors must read the PPM and no person may invest without acknowledging receipt and complete review of the PPM. With respect to any "targeted" goals and performance levels outlined herein, these do not constitute a promise of performance, nor is there any assurance that the investment objectives of any program will be attained. All investments carry the risk of loss of some or all of the principal invested. These "targeted" factors are based upon reasonable assumptions more fully outlined in the Offering Documents/ PPM for the respective offering. Consult the PPM for investment conditions, risk factors, minimum requirements, fees and expenses and other pertinent information with respect to any investment. These investment opportunities have not been registered under the Securities Act of 1933 and are being offered pursuant to an exemption therefrom and from applicable state securities laws. All offerings are intended only for accredited investors unless otherwise specified. Past performance are no guarantee of future results. All information is subject to change. You should always consult a tax professional prior to investing. Investment offerings and investment decisions may only be made on the basis of a confidential private placement memorandum issued by Issuer, or one of its partner/issuers. Issuer does not warrant the accuracy or completeness of the information contained herein. Thank you for your cooperation.
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1031 Risk Disclosure:
There is no guarantee that any strategy will be successful or achieve investment objectives; Potential for property value loss – All real estate investments have the potential to lose value during the life of the investments; Change of tax status – The income stream and depreciation schedule for any investment property may affect the property owner's income bracket and/or tax status. An unfavorable tax ruling may cancel deferral of capital gains and result in immediate tax liabilities; Potential for foreclosure – All financed real estate investments have potential for foreclosure; Illiquidity – Because 1031 exchanges are commonly offered through private placement offerings and are illiquid securities. The secondary market for these investments is very limited, and early sale is not guaranteed. Reduction or Elimination of Monthly Cash Flow Distributions – Like any investment in real estate, if a property unexpectedly loses tenants or sustains substantial damage, there is potential for suspension of cash flow distributions; Impact of fees/expenses – Costs associated with the transaction may impact investors' returns and may outweigh the tax benefits.
Real Estate Risk Disclosure:
There is no guarantee that any strategy will be successful or achieve investment objectives. Potential for property value loss – All real estate investments have the potential to lose value during the life of the investments. Change of tax status – The income stream and depreciation schedule for any investment property may affect the property owner's income bracket and/or tax status. An unfavorable tax ruling may cancel deferral of capital gains and result in immediate tax liabilities. Potential for foreclosure – All financed real estate investments have potential for foreclosure. Illiquidity – These assets are commonly offered through private placement offerings and are illiquid securities. There is no secondary market for these investments. Reduction or Elimination of Monthly Cash Flow Distributions – Like any investment in real estate, if a property unexpectedly loses tenants or sustains substantial damage, there is potential for suspension of cash flow distributions. Impact of fees/expenses – Costs associated with the transaction may impact investor's returns and may outweigh the tax benefits. Stated tax benefits – Any stated tax benefits are not guaranteed and are subject to changes in the tax code. Speak to your tax professional prior to investing.
Opportunity Zone Disclosures:
Investing in opportunity zones is speculative. Opportunity zones are newly formed entities with no operating history. There is no assurance of investment return, property appreciation, or profits. The ability to resell the fund's underlying investment properties or businesses is not guaranteed. Investing in opportunity zone funds may involve a higher level of risk than investing in other established real estate offerings. Long-term investment. Opportunity zone funds have illiquid underlying investments that may not be easy to sell and the return of capital and realization of gains, if any, from an investment will generally occur only upon the partial or complete disposition or refinancing of such investments. Limited secondary market for redemption. Although secondary markets may provide a liquidity option in limited circumstances, the amount you will receive typically is discounted to current valuations. Difficult valuation assessment. The portfolio holdings in opportunity zone funds may be difficult to value because financial markets or exchanges do not usually quote or trade the holdings. As such, market prices for most of a fund's holdings will not be readily available. Capital call default consequences. Meeting capital calls to provide managers with the pledged capital is a contractual obligation of each investor. Failure to meet this requirement in a timely manner could elicit significant adverse consequences, including, without limitation, the forfeiture of your interest in the fund. Leverage. Opportunity zone funds may use leverage in connection with certain investments or participate in investments with highly leveraged capital structures. Leverage involves a high degree of financial risk and may increase the exposure of such investments to factors such as rising interest rates, downturns in the economy or deterioration in the condition of the assets underlying such investments. Unregistered investment. As with other unregistered investments, the regulatory protections of the Investment Company Act of 1940 are not available with unregistered securities. Regulation. It is possible, due to tax, regulatory, or investment decisions, that a fund, or its investors, are unable realize any tax benefits. You should evaluate the merits of the underlying investment and not solely invest in an opportunity zone fund for any potential tax advantage.