1031 Exchange & DST Investing in Georgia
Georgia conforms to federal Section 1031, so a valid exchange defers its 5.19% flat state tax on real property gains. Metro Atlanta's growth drives strong replacement demand, but note Georgia's 3% nonresident withholding on real estate sales.
State tax treatment of a 1031 exchange
Georgia conforms to the federal like-kind exchange rules under Section 1031, so gain deferred federally on investment or business real property is also deferred for Georgia income tax, with carryover basis into the replacement property. Georgia has moved to a flat individual income tax, with a 5.19% rate for 2025 that applies to capital gains since the state offers no preferential capital gains rate.
Georgia imposes a withholding requirement on sales of real property by nonresidents, generally 3% of the sales price or of the seller's gain. A properly structured 1031 exchange can qualify for an exemption or reduction from this withholding, but the exemption must be documented at closing through the required state affidavit or certificate.
Market snapshot
Georgia's real estate market is dominated by metro Atlanta, one of the largest and fastest-growing metros in the Southeast, along with Savannah, Augusta, and the coastal corridor. Atlanta's corporate base, film industry, logistics network, and port-driven industrial demand in Savannah support broad investor interest.
Multifamily, industrial and distribution, office, and single-family rental assets lead demand. Strong population and job growth, plus Savannah's booming port and warehouse market, draw substantial 1031 replacement capital from both in-state and out-of-state investors.
Why 1031 & DST investors look here
- Georgia conforms to Section 1031, deferring its 5.19% flat state tax on qualifying exchanges.
- Metro Atlanta and the Savannah port corridor offer scale, growth, and strong industrial demand.
- A valid exchange can exempt sellers from Georgia's 3% nonresident withholding when properly documented.
Replacement-property options
Georgia investors can exchange into Delaware Statutory Trust (DST) interests for passive, institutional-quality real estate, pursue a 721 UPREIT contribution, or invest gains in Qualified Opportunity Zone funds. The replacement property need not be in Georgia; a DST may hold assets across multiple states, so investors can diversify geography and asset class while satisfying the like-kind requirement.
Frequently asked questions
Does Georgia tax a 1031 exchange?
Not at the time of a valid exchange. Georgia conforms to federal Section 1031, so gain deferred federally is deferred for Georgia's flat income tax until a future taxable sale.
Can I exchange Georgia property for out-of-state DSTs?
Yes. Replacement property does not have to be in Georgia, and DST interests holding real estate in other states can qualify as like-kind replacement property.
How does Georgia's 3% nonresident withholding affect my exchange?
Georgia generally withholds 3% on nonresident real estate sales, but a properly documented 1031 exchange can qualify for an exemption if the required affidavit or certificate is provided at closing.
Gerald F. “Jerry” Baker, III — Founder & Managing Principal, Baker 1031 Investments · FINRA Series 22 / 63 · SIE. Read full bio →
State tax treatment is general and changes frequently; this page is educational and is not tax, legal, or investment advice. Confirm current state and local rules with your own CPA and attorney. Securities offered through Aurora Securities, member FINRA/SIPC. Real estate investments involve risk, including possible loss of principal.