1031 Exchange & DST Investing in Louisiana
Louisiana conforms to federal Section 1031, so a valid exchange defers its 3.0% flat state income tax on real property gains. New Orleans, Baton Rouge, and the industrial Gulf corridor draw 1031 replacement capital.
State tax treatment of a 1031 exchange
Louisiana conforms to the federal like-kind exchange rules under Section 1031, so gain deferred federally on investment or business real property is deferred for Louisiana income tax as well, with carryover basis into the replacement property. Louisiana adopted a flat individual income tax of 3.0% effective for 2025, replacing its prior graduated brackets.
Because Louisiana offers no separate preferential rate for capital gains, the 3.0% flat rate is the effective state rate on any gain ultimately recognized. A 1031 exchange defers that state tax along with the federal tax until a future taxable disposition of the replacement property.
Market snapshot
Louisiana's real estate investment activity centers on New Orleans, Baton Rouge, Lafayette, and the industrial corridor along the lower Mississippi River. Petrochemical, energy, and port-related industry anchors significant industrial and logistics demand, while New Orleans adds tourism-driven hospitality and multifamily activity.
Industrial, multifamily, and hospitality assets lead investor interest. The Gulf ports, energy infrastructure, and comparatively affordable pricing draw 1031 replacement capital, though investors weigh insurance and storm-exposure factors in coastal submarkets.
Why 1031 & DST investors look here
- Louisiana conforms to Section 1031, deferring its new 3.0% flat state tax on qualifying exchanges.
- The lower Mississippi industrial and port corridor supports durable logistics and energy-related demand.
- No state nonresident real estate withholding simplifies closings for out-of-state sellers.
Replacement-property options
Louisiana investors can exchange into Delaware Statutory Trust (DST) interests for passive, professionally managed real estate, contribute into an UPREIT through a 721 exchange, or invest gains in Qualified Opportunity Zone funds. Replacement property does not need to be located in Louisiana; a DST can hold assets across multiple states, allowing diversification while satisfying the like-kind requirement.
Frequently asked questions
Does Louisiana tax a 1031 exchange?
Not at the time of a valid exchange. Louisiana conforms to federal Section 1031, so gain deferred federally is deferred for its 3.0% flat income tax until a future taxable sale.
Can I exchange Louisiana property for out-of-state DSTs?
Yes. Replacement property does not have to be in Louisiana, and DST interests holding real estate in other states can qualify as like-kind.
Does Louisiana withhold tax when a nonresident sells real estate?
Louisiana does not impose a dedicated nonresident real estate withholding at closing, though nonresident sellers still report Louisiana-source gain on a state return.
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.