A 1031 exchange in Mississippi, where the nonresident seller pays the 5%.

If you do not live in Mississippi and you sell Mississippi real property for more than $100,000, the statute makes the seller, not the buyer, responsible for paying the Department of Revenue 5% of the amount realized. The statute applies to a sale "which is not considered an exchange or trade" of the property, so a 1031 exchange may fall outside it, but the statute does not say how a delayed exchange is treated. Settle that with your closing agent and tax advisor before closing.

onezero3one acts as qualified intermediary for exchanges of Mississippi property, subject to a review of each file before an exchange agreement is signed. We work with your closing agent and tax advisor; we do not give tax or legal advice.

What is specific to this state

The federal rules in IRC §1031 decide whether an exchange qualifies. The items below are state requirements that sit alongside them at closing or on the return. Each links to the official source it was checked against; confirm the current version with your closing agent and tax advisor before relying on it.

State items for an exchange (researched September 30, 2026)

Issue	What applies	Usually handled by	Source
Seller payment to the Department	Mississippi Code 27-7-308 requires the seller of real property owned by a nonresident, where gross proceeds exceed $100,000, to pay the Department of Revenue 5% of the amount realized, limited to net proceeds. Since 2015 the seller, not the buyer, is responsible. Nonresident sellers with gross proceeds over $100,000.	The seller pays the Department.	Mississippi Legislature, SB 2589 (2015), as sent to Governor, amending Miss. Code 27-7-308 Checked September 30, 2026
Exchange wording in the statute	The statute applies to a sale of real property "which is not considered an exchange or trade of such property." It does not define the phrase and the Department's form does not mention 1031 exchanges, so how a delayed exchange is treated should be confirmed with the closing agent and a tax advisor. Sellers using a 1031 exchange.	Seller and closing agent to confirm before closing.	Mississippi Legislature, SB 2589 (2015), as sent to Governor, amending Miss. Code 27-7-308 Checked September 30, 2026
Gain affidavit (Form 89-386)	A seller can give the Department an affidavit under penalties of perjury stating the gain, and pay 5% of the gain instead of 5% of the amount realized. Form 89-386 (rev. 10/25) computes the lesser of 5% of the gain or the net proceeds. Nonresident sellers whose gain is less than the amount realized, including a fully deferred exchange.	Seller files with the Department.	Mississippi Department of Revenue, Form 89-386, Affidavit for Withholding Income Tax on Sale of Real Estate by Non-Resident (Rev. 10/25) Checked September 30, 2026

What Mississippi requires of a nonresident seller

Section 27-7-308 of the Mississippi Code applies to a sale of real property and associated tangible personal property that produces gross proceeds greater than $100,000, where the property is owned by a nonresident. A corporation registered to do business in Mississippi counts as a resident. The amount is 5% of the amount realized, and it cannot exceed the net proceeds payable to you.

Since 2015 the seller, not the buyer, is responsible for paying. If the seller does not pay, title is not affected but the seller is personally liable to the Department. A licensed real estate agent or closing agent has no statutory duty to the parties about this section and is not liable under it, so do not assume the closing agent will raise it.

The gain affidavit

If 5% of the amount realized would be more than the tax on your gain, you can give the Department an affidavit, signed under penalties of perjury, stating the gain you must recognize, and pay the percentage of that gain instead. The Department's Form 89-386 (revised 10/25) is the affidavit. It asks for the sale price, the gain, 5% of the gain and the net proceeds, and the amount to pay is the smaller of 5% of the gain or the net proceeds. If you already paid on the full amount, you can claim a refund of the excess with the same kind of affidavit.

How exchanges fit

The statute is written for a sale "which is not considered an exchange or trade of such property." It does not define that phrase, and the Department's form does not mention 1031 exchanges. For a fully deferred delayed exchange there are two ways it can work: the sale is outside the statute, or the gain affidavit shows no recognized gain and so no payment. Which one a particular closing agent accepts is something to confirm in advance. Any boot you receive is recognized gain, so expect payment on that part.

Deed tax and state income tax

We did not find a Mississippi state deed or transfer tax in the official sources we could reach, so confirm recording charges with your closing agent. We also did not find a Mississippi-specific clawback or annual-reporting rule for out-of-state replacement property. Ask your tax advisor how Mississippi treats the gain when you later sell the replacement property. Nearby: Georgia and Florida.

Questions Mississippi sellers ask

Who pays the 5%, the buyer or the seller?

The seller. A 2015 amendment moved the responsibility from the buyer to the seller.

Is there a minimum sale price?

Yes. The statute applies where gross proceeds are greater than $100,000.

Does a 1031 exchange avoid the payment?

The statute excludes a sale that is considered an exchange or trade of the property, but it does not define the term. Where the gain is fully deferred, the gain affidavit also shows no recognized gain. Confirm the approach with your closing agent and tax advisor before closing.

Related

• Exchange preparation sheet
• Checklist for closing professionals
• Fees

Sources

• Mississippi Legislature, SB 2589 (2015) amending Miss. Code 27-7-308 (checked September 30, 2026)
• MS DOR, Form 89-386 (Rev. 10/25) (checked September 30, 2026)
• MS DOR, Affidavit page (checked September 30, 2026)