Dallas property values have shot up, leaving many owners with bigger gains than they expected. That can be great for your net worth, but it can also create a serious tax bill if you are not prepared. To keep more of your equity, you need to be just as smart about taxes as you are about the market.
Here’s how Dallas investors and homeowners can reduce their tax hit.
Use 1031 Exchanges
One of the most common strategies is using 1031 exchange services when selling an investment property. It allows you to defer capital gains taxes by rolling your sale proceeds into another investment property. In a fast-moving market like Dallas, that keeps more of your money working for you instead of sending a large chunk to the IRS right away.
The catch is the timeline. You have 45 days to identify a replacement property and 180 days to close. Because the Dallas market moves quickly, many investors start looking for their next property before they even list the one they plan to sell.
Track Every Improvement
Many owners leave money on the table by losing track of capital improvements. A new roof, HVAC system, kitchen remodel, or major repair can increase your cost basis. A higher basis can reduce your taxable gain when you sell…