1031 Exchange & DST Investing in Nebraska
Nebraska conforms to the federal 1031 exchange and taxes capital gains as ordinary income at a top rate of 5.2% for 2025, with further scheduled cuts, so a like-kind swap defers both state and federal gain. Omaha and Lincoln drive exchange activity, and DST replacement interests are available nationwide.
State tax treatment of a 1031 exchange
Nebraska conforms to IRC Section 1031, so a federal like-kind exchange of real property also defers Nebraska income tax on the gain. Capital gains are taxed as ordinary income, with a top marginal rate of 5.2% for tax year 2025 under a schedule of enacted reductions that lowers the rate in future years.
Nebraska does not impose nonresident real estate withholding at closing and has no clawback or ongoing-reporting rule that recaptures gain deferred on an out-of-state exchange. Deferred gain carries into the replacement property's basis until a later taxable sale.
Market snapshot
Omaha anchors the state with a diversified finance, insurance, and logistics economy and steady multifamily and industrial demand. Lincoln adds university and government-driven stability, while agricultural land represents a large share of statewide real property value.
Omaha's stable, high-employment base and Lincoln's consistent growth draw replacement capital into apartments, industrial, and net-lease assets, and farm owners frequently exchange appreciated ground into income-producing property.
Why 1031 & DST investors look here
- Full 1031 conformity defers Nebraska's 5.2% top tax with the federal gain.
- Omaha's diversified economy supports durable multifamily and industrial demand.
- Farm and rental owners can exchange active holdings into passive DST interests.
Replacement-property options
Nebraska exchangers may identify like-kind replacement real estate anywhere in the country, so an Omaha apartment building or Nebraska farmland can be exchanged into professionally managed Delaware Statutory Trust interests nationwide. DSTs offer fractional, passive ownership across industrial, multifamily, and net-lease sectors; a later 721 UPREIT exchange can convert those interests into REIT operating-partnership units, and Qualified Opportunity Zone funds provide an alternative deferral path for eligible investors.
Frequently asked questions
Does Nebraska tax a 1031 exchange?
No. Nebraska conforms to IRC Section 1031, so a valid like-kind exchange defers Nebraska income tax on the gain until a future taxable sale of the replacement property.
Can I exchange Nebraska property for out-of-state DSTs?
Yes. Like-kind real property can be located in any state, so a Nebraska property, including farmland, can be exchanged into DSTs holding assets elsewhere while keeping 1031 deferral.
What is Nebraska's capital gains tax rate?
Nebraska taxes capital gains as ordinary income, with a top marginal rate of 5.2% for tax year 2025 and further reductions scheduled under current law.
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.