1031 Exchange Utah: The 4.45% Rate, Nonresidents and Moves

Key takeaways

• Utah builds its income tax on your federal adjusted gross income. A gain that a 1031 exchange keeps off your federal return generally stays off your Utah return too.
• Utah uses one rate for all income. A 2026 law cut it to 4.45%, starting with tax years that begin on or after January 1, 2026. The 2025 rate was 4.5%.
• People who live outside Utah owe Utah tax on income from Utah real property. They file a Utah return and use Schedule TC-40B to split their income.
• Partnerships and LLCs with nonresident owners can have Utah withholding duties. Check this before an entity-level sale.
• Swapping California property for Utah property brings a yearly California filing, Form FTB 3840, until the deferred gain is taxed.
• Utah's extension gives more time to file, not to pay. If an exchange fails or you keep cash, plan the payment.

How does a 1031 exchange work for Utah property owners?

Start with the federal rule, because Utah borrows it. Section 1031 of the Internal Revenue Code says no gain is recognized when you swap real property held for business or investment "solely for real property of like kind." Like-kind is broad for real estate. A rental house can be swapped for an apartment building, a strip center or raw land held for investment.

The timing rules are federal too. You must identify replacement property within 45 days of your sale. You must receive it within 180 days or your tax return due date (with extensions) for the year of the sale, whichever comes first. In between, the sale money sits with a qualified intermediary, or QI, rather than with you. My guide to how 1031 exchanges work at the federal level covers those pieces in full.

Utah doesn't add its own deadlines or its own exchange form. What Utah adds is its own tax on whatever gain the exchange doesn't defer, plus a few rules about who owes Utah tax in the first place. If you want to see how Utah stacks up against other states, my state-by-state 1031 guide has the comparison.

How does Utah tie its tax to your federal return?

Utah's Individual Income Tax Act defines adjusted gross income by pointing to federal law. Under Utah Code § 59-10-103, adjusted gross income "for a resident or nonresident individual, means the same as that term is defined in Section 62, Internal Revenue Code."

AGI is short for adjusted gross income: your total income minus certain federal adjustments. It's the starting point for most state income taxes.

That one definition does most of the work for an exchange. If Section 1031 defers your gain, the gain isn't part of federal AGI that year. Since Utah starts from the same number, the gain doesn't reach your Utah return either. You don't make a separate Utah election.

What still reaches your Utah return

The same link works in reverse. If part of your gain is taxable on your federal return, Utah generally taxes that part too. The usual sources are:

1. Leftover cash. Money your QI releases to you instead of spending on replacement property.
2. A smaller loan. A new mortgage below the old payoff, with no extra cash put in to make up the difference, generally leaves a taxable shortfall.
3. Non-real-estate items. Personal property or a seller-financed note that comes to you in the deal.

Tax professionals call these pieces boot. If you want the details, this guide to partial 1031 exchanges shows how each kind of boot is measured. On the Utah side, boot is simply income taxed at Utah's flat rate.

What is Utah's tax rate on a real estate gain?

Utah doesn't have a separate rate for capital gains. The Utah State Tax Commission's tax rates page says "Utah has a single tax rate for all income levels." A gain on a rental is taxed at the same rate as a paycheck.

The 2026 rate

In 2026, the Legislature passed Senate Bill 60, which amends Utah Code § 59-10-104. It replaces the 4.5% rate with 4.45%. The bill says it "has retrospective operation for a taxable year beginning on or after January 1, 2026." So for a calendar-year filer, a sale that closes anytime in 2026 is taxed at 4.45%, even if it closed before the bill took effect on May 6, 2026.

How the rate has moved

Utah has trimmed its rate several times. The Tax Commission's rate page lists the earlier years, and SB 60 shows the 2025 and 2026 figures.

As of October 2026, the Tax Commission's rate page still listed 4.55% (the 2024 rate) as the current rate. The statute controls, so use 4.45% for 2026 and confirm with your CPA if the rate changes again.

Why the rate history matters for an exchange

A rate cut doesn't change a deferred gain. It changes the tax when the gain is finally recognized. If you defer in 2026 and sell for cash years later, Utah generally taxes the gain at whatever rate applies in the year of that later sale, assuming you still owe Utah tax then. Nobody can promise the rate will keep falling. It could also rise.

What the flat rate means in dollars

With one rate, the Utah share is easy to estimate. Multiply the taxable gain by 4.45%. This table uses hypothetical gains.

These numbers are estimates. Your CPA will apply Utah's credits and other adjustments, and federal tax is a separate, larger bill. Still, the table shows why even a modest state rate adds up on a long-held property.

Do nonresidents owe Utah tax when they sell Utah property?

Yes, on the Utah piece of their income. Utah's statute on Utah-source income, Utah Code § 59-10-117, counts income attributable to "the ownership in this state of any interest in real or tangible personal property." Rent and taxable gain from a Park City condo or a Provo fourplex fall into that group.

Who has to file

The Tax Commission's who must file page says you must file a Utah TC-40 return if you "are a nonresident or part-year resident with income from Utah sources who must file a federal return." So if a nonresident's Utah sale is fully deferred, there's no taxable Utah gain from the sale itself. But rent earned before the sale can still create a filing requirement for that year.

How Utah splits a nonresident's income

Nonresidents attach Schedule TC-40B. The TC-40B instructions have you list income "earned or received from Utah sources while not a Utah resident" in one column and all income in another. You then "Divide the total on line 38 Column A by the total on line 38 Column B," and multiply Utah's tax on all your income by that ratio. The result "is your Utah tax."

Because Utah's rate is flat, the result is close to Utah income times 4.45%, before credits. Here's a hypothetical.

• Say you live out of state and have $200,000 of income from home.
• You sell a Utah rental for a $300,000 taxable gain, with no exchange.
• Your total income is $500,000. Utah's tax on all of it at 4.45% is $22,250.
• Your Utah ratio is $300,000 ÷ $500,000 = 0.6000.
• Your Utah tax is $22,250 × 0.6 = $13,350, the same as $300,000 × 4.45%.

With a full exchange, the $300,000 gain isn't in federal AGI, so it isn't in either column. Utah's share of the sale drops to zero for that year.

Part-year residents

People who move into or out of Utah during the year file as part-year residents, using the same TC-40B schedule. The timing of your sale inside that year matters. A gain you recognize while you live in Utah is Utah income. A gain you recognize after you've moved away counts for Utah only if it comes from Utah sources, such as Utah real property.

That's why the date you change residence and the date of any taxable sale should be planned together. If you're moving to or from Utah in the same year you sell, and part of the sale will be taxable, sit down with your CPA before both events. Keep records that show when you moved: a lease or closing statement for your new home, a new driver's license, voter registration and similar documents.

Rent before the sale still counts

Even in a fully deferred exchange, a nonresident usually has Utah rent for the months before closing. That rent is Utah-source income too. So a nonresident who sells a Utah rental in a complete exchange may still have a Utah return to file for the year of the sale, just without the gain on it.

What if a partnership or LLC owns the Utah property?

Many Utah rentals sit in an LLC. An LLC with two or more members is usually taxed as a partnership. A partnership, for tax purposes, doesn't pay income tax itself. It passes income through to its owners.

Utah has a withholding system for these entities. The Tax Commission's pass-through entity withholding page lists "nonresident individual partners, members, shareholders and beneficiaries" among those covered. It refers entities to the instructions for Forms TC-65 and TC-20S.

That matters in two ways for an exchange.

• If the LLC exchanges as a whole, a fully deferred gain generally creates no Utah income to pass through. Any boot the LLC receives can pass through to members and may bring withholding for nonresident members.
• If members want different things, the classic problem appears. One member wants cash, another wants to exchange. Splitting the property out of the LLC before a sale is a legal and tax project, not a paperwork step. Talk to a tax attorney months ahead.

The same-taxpayer rule also applies: the taxpayer who sells generally must be the same taxpayer who buys. A single-member LLC that the IRS disregards for tax is usually treated as its owner for this purpose. An LLC that sells can't hand the exchange off to one member who buys in their own name, unless the structure was changed properly beforehand.

When is Utah tax due if part of the exchange is taxable?

A partial or failed exchange creates real tax. Utah's payment rules decide when you have to pay it.

Utah's filing-extension statute, Utah Code § 59-10-516, says the extension "may be up to six months." That extension covers filing only. To avoid a penalty while on extension, the statute looks at what you paid "on or before the return due date described in Section 59-10-514." The payment must reach either "90% of the total tax reported on the return for the current taxable year" or "100% of the total tax liability for the taxable year immediately preceding the current taxable year." Otherwise, the statute says the commission may apply a penalty to the balance due.

Two extensions, two purposes

Don't mix up the Utah extension with the federal one.

• The federal extension can matter for the exchange itself. The 180-day window ends early if your federal return comes due first. The IRS says Form 4868 is used "to apply for six (6) more months to file Form 1040."
• The Utah extension only affects when you file your Utah return. It doesn't extend your exchange or your payment.

If you sell in October and expect to keep some cash, set money aside for both federal and Utah tax. Ask your CPA whether a payment by the April due date meets the 90%-of-this-year or 100%-of-last-year test in § 59-10-516.

Moving exchange money into or out of Utah

Section 1031 doesn't care which states are involved, as long as both properties are in the United States. The statute, 26 U.S.C. § 1031(h), treats domestic and overseas real estate as two separate groups that "are not property of a like kind." Utah-to-Idaho, Texas-to-Utah and California-to-Utah all work under federal law. The state tax follow-up is what differs.

Selling in Utah, buying in another state

If you live in Utah, Utah taxes your income based on federal AGI, wherever it comes from. So an exchange from Ogden into a warehouse in another state defers Utah tax now. When you later sell that warehouse for cash, the gain is generally Utah income if you still live in Utah. The other state may tax it too, as Utah-source rules work there in reverse. Whether Utah gives you a credit for the other state's tax is a question for your CPA.

If you live elsewhere and sell Utah property, a full exchange means no Utah gain in the sale year. Later, when you sell the replacement property, ask your CPA how Utah views a gain that started with Utah real estate.

Selling in California, buying in Utah

California follows its deferred gain across state lines. Its instructions for Form FTB 3840 say the form covers taxpayers "who exchange real property located in California for like-kind property located outside of California," whether or not they live in California. It's due for the exchange year "and for each subsequent taxable year, generally until the California sourced deferred gain or loss is recognized."

So if you swap a Sacramento duplex for a Salt Lake City rental and move to Utah, California still expects that yearly filing. The instructions also say "The source of such gain or loss is preserved without regard to when such gain or loss may be recognized." In other words, the California part of the gain stays California's. My California 1031 guide explains how that plays out at the final sale.

Moving to Utah after an exchange elsewhere

If you exchanged in another state and then moved to Utah, two states may care about the same gain later. Bring both states' rules to your CPA before you sell the replacement property for cash.

Can a Utah cabin or ski condo be part of an exchange?

Utah has a lot of second homes, from mountain cabins to condos near the ski resorts to winter places in Washington County. Owners often ask whether one of these can be sold or bought in a 1031 exchange.

The federal answer turns on how you use the property. Section 1031 covers real property "held for productive use in a trade or business or for investment." Property you mostly use yourself doesn't fit. A unit you rent out as an investment can.

The IRS published a safe harbor for this in Rev. Proc. 2008-16. A safe harbor is a set of facts the IRS has said it won't challenge. The procedure covers a dwelling unit, which it defines as "real property improved with a house, apartment, condominium, or similar improvement" with sleeping space, a bathroom and cooking facilities.

The tests for a unit you sell

• Ownership. "The dwelling unit is owned by the taxpayer for at least 24 months immediately before the exchange."
• Renting. In each of the two 12-month periods before the exchange, you rent it "at a fair rental for 14 days or more."
• Personal use. In each of those periods, your own use can't exceed "the greater of 14 days or 10 percent" of the days it was rented at a fair rent.

The tests for a unit you buy

The same three tests apply to the replacement, but looking forward. You own it for at least 24 months after the exchange. In each of the two 12-month periods after the exchange, you rent it at a fair rent for 14 days or more, and you keep personal use within the same limit.

A quick illustration

Here's a hypothetical. Say you own a Park City condo and rent it at market rates for 150 nights a year. Ten percent of 150 is 15, which is more than 14. So under the safe harbor, your own stays can't exceed 15 days in each year. If your family uses it for 30 nights each winter, the condo falls outside the safe harbor.

Falling outside the safe harbor doesn't automatically mean the exchange fails. It means you lose the IRS's promise not to question it, and you'd be relying on the general "held for investment" facts. Talk with your CPA before you count on a vacation property in an exchange, either as the one you sell or the one you buy.

Utah doesn't add a separate test. If the federal exchange works, Utah follows it through AGI. If it doesn't, Utah taxes the gain at 4.45% for 2026.

Is a 1031 exchange worth it on a Utah sale?

Not every sale needs an exchange. A flat 4.45% state rate is lower than many states charge, so the Utah share alone rarely decides it. The decision usually rests on the combined federal and Utah bill, and on your plans.

Factors that point toward exchanging

• A large gain. After decades of ownership and depreciation, the combined tax can be a big share of your equity.
• You want to keep owning real estate. If you'd buy property again anyway, deferring lets the full amount go back to work.
• Your heirs matter to you. Under current federal law, 26 U.S.C. § 1014 generally sets the basis of inherited property at "the fair market value of the property at the date of the decedent's death." Gain deferred through a chain of exchanges may never be taxed if you hold until death. Congress can change that rule.

Factors that point toward selling

• A small gain. If your gain is modest, QI fees and the cost of a rushed purchase may eat much of the benefit.
• You need the cash. An exchange ties up your equity in new property. If you need the money for retirement, a home or a business, a taxable sale may fit better.
• You're done with real estate. Exchanging just to avoid tax, into something you don't want, can cost more than the tax.
• You'll sell the replacement soon. Deferral helps most when you hold for years.

A hypothetical comparison

Say a Logan rental has a $90,000 gain. Utah tax at 4.45% would be about $4,005. Federal tax would be more. If the owner wants out of landlording and needs the money, paying the tax may be the simpler path. Now say a Salt Lake City apartment building has a $3,000,000 gain. Utah tax alone would be about $133,500. At that size, an exchange deserves a close look, even if you end up deciding against it.

A Utah exchange on the calendar

Dates are where exchanges go wrong, so here is one hypothetical sale traced through a full year. The dates are for illustration only.

As a reminder, the federal rule is that you must receive the replacement within 180 days or your tax return due date (with extensions) for the year of the sale, whichever comes first. Here's how that plays out.

Say a Utah resident closes the sale of a Weber County rental on September 15, 2026. Day 45 lands on October 30, 2026, so the written identification must be delivered by then. Day 180 lands on March 14, 2027. The federal return for 2026 is normally due in mid-April 2027, which is after day 180. So in this case the 180 days control, and a federal extension isn't needed to protect the window.

Now move the sale to November 20, 2026. Day 180 would land in mid-May 2027, after the normal April due date. Without a federal extension, the exchange period would end on the April due date instead. Filing Form 4868 keeps the full 180 days available.

On the Utah side, if any part of the gain is taxable, the 2026 Utah tax is due by the original April 2027 due date, even if the Utah return is filed later under an extension. A California-to-Utah exchanger would also file Form FTB 3840 with California for 2026 and for each later year until the California gain is recognized.

What are the steps for a 1031 exchange in Utah?

These steps follow the federal process, with Utah's pieces marked.

Step 1: Get a two-number estimate

Ask your CPA for the federal and Utah tax on a straight sale. Utah's share is roughly 4.45% of the taxable gain for 2026. Seeing both numbers tells you how much the exchange is worth.

Step 2: Check who the seller is

Look at the deed. When title sits in an LLC or partnership, the entity is the exchanger, not its members. If members disagree about the plan, solve it now.

Step 3: Hire a qualified intermediary before closing

Sign the QI agreement while the sale is still pending; afterward is too late. Ask how the QI holds funds and how quickly it can wire money for your purchase.

Step 4: Tell the title company it's an exchange

Your title company or closing agent needs to coordinate with the QI. Proceeds go to the QI, not to you.

Step 5: Put your replacement list in writing by day 45

Write down each property clearly, sign the list and deliver it as the rules require. My guide to identifying replacement property covers the three-property and 200% rules in detail. My 1031 exchange deadline calculator can help you mark the dates.

Step 6: Close in time

You must receive the property within 180 days or your tax return due date (with extensions) for the year of the sale, whichever comes first. For a sale after mid-October, file the federal extension so the due date doesn't cut the window short.

Step 7: Plan for any taxable piece

If you'll keep cash or end up with less debt, estimate the federal and Utah tax. Pay Utah by the original return due date if needed to meet the 90% or 100% test in § 59-10-516.

Step 8: File the returns

Federal Form 8824 is where the exchange gets reported. The IRS page for Form 8824 says the form's Parts I, II and III are used "to report each exchange of business or investment property for property of a like kind." Utah picks up the result through AGI. Nonresidents add Schedule TC-40B.

Step 9: Keep the records

Save the QI agreement, closing statements, identification list and Form 8824. If you swapped out of California, keep a copy of each FTB 3840 too.

A worked example: a Utah rental, three ways

Everything in this example is hypothetical, with round numbers chosen to show the mechanics. No real seller, building or offering is behind it. I estimate only the Utah tax, skip Utah's credits and set federal tax aside. Please don't treat it as tax advice.

The sale

Say a couple bought a St. George rental years ago. They sell it in 2026 for $1,200,000 and pay $60,000 in selling costs. Their adjusted basis, meaning what they paid plus improvements minus depreciation taken, is $440,000.

Their gain is $1,200,000 − $60,000 − $440,000 = $700,000.

They had a $300,000 mortgage. After paying it off, $840,000 of cash goes to the QI.

Version 1: a straight sale

The full $700,000 is taxable. Utah tax at 4.45% is about $31,150. That's due with their 2026 return, and paying it by the original due date avoids a Utah extension penalty.

Version 2: a full exchange

They buy a $1,300,000 replacement property with all $840,000 of cash and a new $460,000 loan. The replacement costs more than their $1,140,000 net sale price, all the cash is reinvested, and the new loan is larger than the old one. No gain is recognized federally, so Utah tax on the sale is $0 now.

Version 3: they keep $100,000

They reinvest $740,000 and take $100,000 home. They also buy enough property, with enough debt, that the only taxable piece is the cash. Utah tax on the $100,000 is about $4,450. The other $600,000 of gain stays deferred.

The deferred gain doesn't disappear

In Versions 2 and 3, the deferred gain carries into the replacement property through a lower basis. If the couple later sells for cash while living in Utah, Utah generally taxes that gain then. The tax is postponed, not forgiven.

Utah residents, nonresidents and entities compared

Can a DST be your replacement property for a Utah sale?

It can. A Delaware Statutory Trust, or DST, holds title to commercial real estate, and investors buy beneficial interests in the trust. IRS Revenue Ruling 2004-86 concludes that "A taxpayer may exchange real property for an interest in the Delaware statutory trust" when the other requirements are met. That's why a DST interest can qualify as like-kind replacement property. My guide to DSTs explains the structure.

Where a DST can fit a Utah seller

• Stepping back from management. A sponsor, the firm that buys and runs the property, handles tenants and repairs.
• Matching an exact dollar amount. A DST interest can soak up cash that would otherwise become boot.
• Owning outside Utah without traveling. Many DSTs hold property in other states.
• A backup on your identification list. Naming a DST as a backup can help if your main purchase falls apart.

What you give up

• Liquidity. There's usually no way to cash out until the sponsor sells. The SEC's bulletin on private placements calls these investments "highly illiquid."
• Control. The sponsor decides on leases, loans and timing. You don't get a vote on those decisions.
• Certainty of income. Distributions are not guaranteed; the sponsor may trim them or halt them.
• Your principal. If the property loses value, so does your stake, possibly down to nothing.
• Eligibility. Most DSTs are limited to accredited investors, generally people who meet SEC income, net-worth or professional-license tests. My accredited investor guide covers the tests.

The Utah tax side of a DST

Revenue Ruling 2004-86 says each owner is "considered to own an undivided fractional interest" in the property for federal tax. So a Utah resident who owns a DST with buildings in a state that taxes income may need to file a return in that state. A nonresident who owns a DST with a Utah building can end up with Utah-source income and a TC-40 filing. Ask your CPA about filings before you choose.

My background covers my earlier work acquiring, managing and developing real estate, and I now run Baker 1031 Investments from San Francisco and Los Angeles. My firm works with more than 20 institutional DST sponsors. My team and I look at five areas on each one: broker-dealer review, investment manager audit, investment offering review, real estate assessment and institutional underwriting. If you'd like to see what's open now, here are my current DST offerings. Securities are offered through Aurora Securities, Inc., member FINRA/SIPC. I don't give tax advice, so keep your CPA involved. My guide on how to invest in a DST walks through the steps.

Mistakes to avoid in a Utah exchange

1. Using last year's rate. The 2026 rate is 4.45% under SB 60. Old tables and some web pages still show higher rates.
2. Assuming no Utah filing because you live elsewhere. Rent and taxable gain from Utah property are Utah-source income.
3. Selling LLC interests instead of the property. That generally can't be a 1031 exchange, because Section 1031 covers real property and an interest in a partnership isn't real property.
4. Letting members fight at the closing table. If one owner wants cash and another wants to exchange, fix the structure months before you list.
5. Treating the Utah extension as more time to pay. It isn't. A penalty can apply if your payments by the original due date fall short of the § 59-10-516 test.
6. Forgetting the federal extension. A late-year sale needs it so the 180 days aren't cut short.
7. Leaving California's form behind. A California-to-Utah exchange means filing FTB 3840 each year until the gain is taxed.
8. Counting only the Utah tax. Federal tax on the same gain is usually far larger. Look at both before you decide an exchange isn't worth it.
9. Ignoring the replacement's state. A building in a state with its own income tax can mean a yearly nonresident return there.
10. Identifying only one property. If it falls through after day 45, you can't add a new one.

What my data shows

If you exchange into a DST, the property may sit outside Utah, so location is the first number I'd look at. Here is what the offering records I keep show. My offering records as of October 2026 cover 76 DST offerings from 38 sponsors. These counts reflect the offerings on my list today; treat them as a snapshot, not a forecast of later offerings.

Locations span 33 states; the most common are Florida (14), Texas (13), North Carolina (8), Georgia (7).

Seen from Utah, each location can mean a different set of state tax filings. Read the location list in the offering documents and ask your CPA about each state.

Property types

My offering records as of October 2026 break down by property type like this: multifamily 31 (41%), industrial 18 (24%), net lease 15 (20%, including energy royalty programs), self-storage 5, retail 4, medical office 3. If you're selling a Utah apartment building, multifamily is the most common type in the records. Industrial and net lease give you other options if you want something different from what you're selling.

Hold periods and exit paths

In my offering records as of October 2026, a projected hold of 10 years is the most common (31 offerings). Others project 5–10 years or 7 years, and a few are 2-year programs. A projected hold is a sponsor's estimate, not a promise.

Exit paths matter too. A 721 exit is a later swap of the DST's property into a REIT's operating partnership, the entity that holds the REIT's real estate, in return for units in that partnership (this setup is called an UPREIT). A REIT is a company that owns income-producing real estate. In my offering records as of October 2026, 721 exits are 44 (58%) optional, 13 (17%) mandatory, 17 (22%) none, and 2 unclear. Once you hold partnership units, you can't do another 1031 exchange with them. If you think you'll want to exchange again, that term deserves a close read.

Frequently asked questions

Does Utah allow 1031 exchanges?

Yes. Because Utah's tax starts from federal adjusted gross income, a gain that Section 1031 keeps off your federal return generally stays off your Utah return. Utah doesn't require its own exchange form.

What is Utah's capital gains tax rate in 2026?

Utah taxes capital gains at its single income tax rate. For tax years beginning on or after January 1, 2026, that rate is 4.45% under Senate Bill 60. The 2025 rate was 4.5%.

Do I have to pay Utah tax if I live in another state and sell Utah property?

You owe Utah tax on Utah-source income, which includes income from owning Utah real property. If the gain is fully deferred in a 1031 exchange, there's no taxable Utah gain from the sale that year. You may still need to file for rent or any cash you kept.

Does Utah withhold tax when a nonresident sells real estate?

Utah's pass-through withholding rules apply to partnerships and S corporations with nonresident owners, covered in the Form TC-65 and TC-20S instructions. As an individual seller, you report the gain on your own Utah return. Ask your title company and CPA whether any withholding or prepayment applies to your closing.

Can I exchange Utah property for property in another state?

Yes. Federal law lets you swap real property anywhere in the United States for real property in any other state. If you stay a Utah resident, Utah generally taxes the deferred gain when you later sell the replacement for cash.

I sold California property and bought in Utah. Do I still file with California?

Generally, yes. California wants Form FTB 3840 every year, starting with the exchange year, until the California-source gain is finally recognized. That applies even if you now live in Utah.

Does Utah give me more time to pay tax on a failed exchange?

No. Utah's extension of up to six months is for filing, not paying. Under Utah Code § 59-10-516, you avoid a penalty only if your payments by the original due date reach 90% of this year's tax or 100% of last year's.

Can my Utah LLC do a 1031 exchange?

Yes, but the LLC is the taxpayer, so the LLC has to buy the replacement property. If members want to go separate ways, the ownership usually has to be restructured well before the sale.

Is a DST a valid 1031 replacement for a Utah property?

IRS Revenue Ruling 2004-86 is why a DST interest can qualify, as long as the rest of the exchange checks out. Most are limited to accredited investors, they're illiquid, and distributions are not guaranteed, with a real chance of losing money.

Will a lower Utah rate in the future reduce my deferred tax?

It might, but there's no way to know. Utah taxes a deferred gain under the rate in effect when the gain is recognized, and rates can go up as well as down. Don't base an exchange decision on a future rate cut.

Before you act

Treat this page as background reading, not tax, legal or investment advice. Utah's rate changed in 2026 and could change again, so have your plan reviewed by your own tax preparer, a lawyer and your intermediary before you sign anything. DST interests are offered only to qualified investors through a private placement memorandum, and an investor's entire stake is at risk.

Sources

• 26 U.S.C. § 1031, Exchange of real property held for productive use or investment (Cornell LII)
• Utah Code § 59-10-103, Definitions (Utah Legislature)
• Utah Code § 59-10-117, State taxable income derived from Utah sources (Utah Legislature)
• Utah Legislature, S.B. 60 (2026), Income Tax Rate Amendments, enrolled
• Utah State Tax Commission, Tax rates
• Utah State Tax Commission, Who must file
• Utah State Tax Commission, TC-40B Non or Part-year Resident Schedule instructions
• Utah Code § 59-10-516, Filing extension, payment of tax, penalty (Utah Legislature)
• Utah State Tax Commission, Pass-through entity withholding tax
• 26 U.S.C. § 1014, Basis of property acquired from a decedent (Cornell LII)
• IRS Rev. Proc. 2008-16, safe harbor for dwelling units
• California Franchise Tax Board, 2025 Instructions for Form FTB 3840
• IRS Revenue Ruling 2004-86
• IRS, About Form 8824, Like-Kind Exchanges
• IRS, About Form 4868
• Investor.gov, Private Placements under Regulation D