Wisconsin taxes capital gains as ordinary income — up to 7.65% — stacked on top of federal tax, so selling appreciated real estate can cost roughly ~31.5% of the gain. A 1031 exchange into a Delaware Statutory Trust lets Wisconsin investors defer that combined bill and trade active landlording for passive institutional real estate.
The Wisconsin 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 |
| Wisconsin income tax (7.65%) | $114,750 |
| Total if you simply sell | $471,750 |
| Tax if you 1031 into a DST | $0 deferred |
In Wisconsin'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 Wisconsin numbers →
Wisconsin 1031 rules
Rules summarized as of 2026 — verify with your tax advisor.
Conforms to federal §1031
Wisconsin conforms to IRC §1031, so a qualifying exchange defers Wisconsin tax as well as federal tax. Wisconsin excludes 30% of net long-term capital gains (60% on qualifying farm assets), lowering the effective rate.
Withholding at sale
Wisconsin 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 7.65%. Wisconsin excludes 30% of net long-term capital gains (60% on qualifying farm assets), lowering the effective rate.
Wisconsin market snapshot
Illustrative — wire to a market-data feed; refreshed quarterly.
Baker 1031 in Wisconsin
Realized (acquired, held, sold) programs on Wisconsin 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 |
|---|---|---|---|---|
| Hunt Club Equities LLC — Madison | Time Equities | 20.64% | 3.03x | 7.87 yr |
| Chi-Chi's — Appleton | AEI | 5.47% | 1.45x | 8.32 yr |
| Two Park Office Building — Milwaukee | Syndicated Equities | 0.77% | 1.02x | 2.57 yr |
| KinderCare / Children's World — De Pere | AEI | 7.58% | 1.89x | 14.81 yr |
| Marriott Fairfield Inn — Milwaukee | Syndicated Equities | -41.79% | 0.08x | 4.67 yr |
See every Wisconsin deal in the Data Center →
Current offerings for Wisconsin investors
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Wisconsin FAQ
What is the capital gains tax rate in Wisconsin?
Wisconsin taxes capital gains as ordinary income, up to 7.65%, with no separate long-term rate. Combined with the federal 20% rate and the 3.8% net investment income tax, a high-bracket Wisconsin seller can face roughly ~31.5% on a real estate gain. Wisconsin excludes 30% of net long-term capital gains (60% on qualifying farm assets), lowering the effective rate.
Does Wisconsin recognize 1031 exchanges?
Yes. Wisconsin conforms to IRC §1031, so a properly structured exchange defers Wisconsin tax as well as federal tax.
Why use a 1031 exchange in Wisconsin?
To defer the tax on a large gain (up to about ~31.5% 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.