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States

1031 exchanges, state by state.

The federal rules are the same everywhere. What differs is the paperwork at the deed, the transfer tax, how the state taxes the gain later, and whether the state regulates the intermediary.

Updated September 30, 2026 · Reviewed by onezero3one professional staff on September 30, 2026

Whether an exchange qualifies is a federal question under IRC §1031. States add four kinds of requirements around it, and a few states also regulate the company that holds the exchange funds.

What varies by state

  • Tax at closing for nonresident sellers. Some states collect an estimated payment or withholding when a nonresident sells, and provide a form to claim the exchange; New Jersey's GIT/REP-3 and New York's IT-2663 are examples.
  • Transfer tax on the deed. Most states that charge a deed or transfer tax charge it on exchanges too, often on both the sale deed and the purchase deed.
  • How the state taxes the gain later. Most states follow the federal deferral. A few track the deferred gain when the replacement property is in another state; California's Form 3840, filed every year until the gain is recognized, is the best-known example. Pennsylvania followed federal treatment only from 2023.
  • Closing practice. Attorney closings, title-company closings and escrow closings route the same exchange documents through different people.

States with detailed pages

Pages are added when there is something specific and sourced to say about a state. For other states, the federal guides apply, and your closing agent can confirm the state's own forms.

States that regulate exchange facilitators

Nine states have laws aimed at the companies that hold exchange funds: California, Colorado, Connecticut, Idaho, Maine, Nevada, Oregon, Virginia and Washington. The requirements differ: some require a license (Nevada and Maine, and Idaho under its Escrow Act), and most require a fidelity bond or similar security and errors-and-omissions coverage, rules about how funds are held, and notices to clients. If your property is in one of these states, ask any intermediary you are considering how it meets that state's requirements, and ask to see the evidence.

Whether onezero3one can act on a particular exchange, including whether any state requirements apply, is confirmed before an exchange agreement is signed.

Related

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