Ohio taxes capital gains as ordinary income — up to 2.75% — stacked on top of federal tax, so selling appreciated real estate can cost roughly ~26.6% of the gain. A 1031 exchange into a Delaware Statutory Trust lets Ohio investors defer that combined bill and trade active landlording for passive institutional real estate.
The Ohio tax math
Here's the tax stack on a long-held rental sold for a $1.5M gain (excludes depreciation recapture, taxed separately at up to 25%):
| On a $1.5M gain | Tax |
|---|---|
| Federal long-term capital gains (20%) | $300,000 |
| Net investment income tax (3.8%) | $57,000 |
| Ohio income tax (2.75%) | $41,250 |
| Total if you simply sell | $398,250 |
| Tax if you 1031 into a DST | $0 deferred |
In Ohio's top bracket, roughly the combined rate above goes to tax if you sell outright — versus $0 now with a qualifying 1031 exchange. Run your Ohio numbers →
Ohio 1031 rules
Rules summarized as of 2026 — verify with your tax advisor.
Conforms to federal §1031
Ohio conforms to IRC §1031, so a qualifying exchange defers Ohio tax as well as federal tax.
Withholding at sale
Ohio may require nonresident withholding at closing; a qualifying 1031 exchange generally defers it. Confirm specifics with your closing agent.
How gains are taxed
Taxed as ordinary income — up to 2.75%.
Ohio market snapshot
Illustrative — wire to a market-data feed; refreshed quarterly.
Baker 1031 in Ohio
Realized (acquired, held, sold) programs on Ohio assets. Joined from full-cycle-deals.csv; sponsor-reported, net-to-investor, not independently verified; past performance ≠ future results.
| Program | Sponsor | Avg annual | Equity × | Hold |
|---|---|---|---|---|
| Tumbleweed — Chillicothe | AEI | 8.81% | 1.62x | 9.2 yr |
| Applebee's — Middletown | AEI | 9.55% | 2.39x | 14.13 yr |
| Tumbleweed — Columbus | AEI | 7.42% | 1.43x | 11.24 yr |
| Champps — Centerville | AEI | 5.43% | 0.82x | 11.75 yr |
| Champps — Lyndhurst | AEI | 5.78% | 1.02x | 17.17 yr |
| Rite Aid — Youngstown | Syndicated Equities | 6.15% | 2.60x | 16.01 yr |
| Severance Town Center — Cleveland Heights | Syndicated Equities | -4.53% | 0.58x | 11.75 yr |
| Champps — Columbus (Easton) | AEI | 8.14% | 1.85x | 15.54 yr |
See every Ohio deal in the Data Center →
Current offerings for Ohio investors
Learn more
Ohio FAQ
What is the capital gains tax rate in Ohio?
Ohio taxes capital gains as ordinary income, up to 2.75%, with no separate long-term rate. Combined with the federal 20% rate and the 3.8% net investment income tax, a high-bracket Ohio seller can face roughly ~26.6% on a real estate gain.
Does Ohio recognize 1031 exchanges?
Yes. Ohio conforms to IRC §1031, so a properly structured exchange defers Ohio tax as well as federal tax.
Why use a 1031 exchange in Ohio?
To defer the tax on a large gain (up to about ~26.6% combined) and move from active landlording into passive, professionally managed real estate while keeping your full equity invested. These are Regulation D offerings for accredited investors.
Disclosures
This page is educational and is not investment, tax, or legal advice, or an offer to sell or a solicitation to buy any security. State tax and 1031 rules summarized here are general, current as of 2026, and not tax advice — verify with your CPA and attorney. For accredited investors only. Representatives may transact business only in states where registered or exempt. Securities offered through Aurora Securities, Inc., member FINRA/SIPC; Baker 1031 Investments, LLC is independent of Aurora. Performance shown is sponsor-reported, realized programs only, net of fees, not independently verified, and not indicative of future results.