1031 Exchange & DST Investing in Mississippi
Mississippi conforms to federal Section 1031, so a valid exchange defers its 4.4% flat state income tax on real property gains. Jackson, the Gulf Coast, and the DeSoto County logistics market attract 1031 replacement capital.
State tax treatment of a 1031 exchange
Mississippi 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 Mississippi income tax, with basis carrying over into the replacement property. Mississippi applies a flat individual income tax, set at 4.4% for 2025 as part of a scheduled phase-down of the rate.
Mississippi provides no separate preferential capital gains rate for most real estate, so the flat rate is the effective state rate on any gain ultimately recognized. A 1031 exchange defers that state tax alongside the federal tax until a future taxable disposition.
Market snapshot
Mississippi's investment markets include the Jackson metro, the Gulf Coast around Gulfport and Biloxi, and the fast-growing DeSoto County suburbs south of Memphis. DeSoto County's position within the Memphis logistics hub drives significant warehouse and distribution demand, while the Gulf Coast supports hospitality and multifamily.
Industrial and logistics, multifamily, and coastal hospitality assets lead investor interest. Affordable pricing, proximity to the Memphis distribution network, and steady regional demand draw 1031 replacement capital seeking value and cash flow.
Why 1031 & DST investors look here
- Mississippi conforms to Section 1031, deferring its 4.4% flat state tax on qualifying exchanges.
- DeSoto County anchors part of the Memphis logistics corridor with strong industrial demand.
- No state nonresident real estate withholding keeps closings simple for out-of-state sellers.
Replacement-property options
Mississippi investors can exchange into Delaware Statutory Trust (DST) interests for passive real estate ownership, use a 721 exchange into an UPREIT, or direct gains into Qualified Opportunity Zone funds. Replacement property need not be located in Mississippi; a DST can hold assets in multiple states, letting investors diversify geography and asset class while meeting the like-kind requirement.
Frequently asked questions
Does Mississippi tax a 1031 exchange?
Not at the time of a valid exchange. Mississippi conforms to federal Section 1031, so gain deferred federally is deferred for its flat income tax until a future taxable sale.
Can I exchange Mississippi property for out-of-state DSTs?
Yes. Replacement property does not have to be in Mississippi, and DST interests holding real estate in other states can qualify as like-kind.
Does Mississippi withhold tax when a nonresident sells real estate?
Mississippi does not impose a dedicated nonresident real estate withholding at closing, though nonresident sellers still report Mississippi-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.