1031 Exchange & DST Investing in Oregon
Oregon conforms to Section 1031 but taxes gains at a high 9.9% top rate and enforces a clawback, requiring Form 24 each year after an exchange into out-of-state property. Portland anchors a market that, combined with the high rate, makes Oregon a meaningful source of exchange capital.
State tax treatment of a 1031 exchange
Oregon conforms to Section 1031, so a properly structured exchange defers Oregon income tax on the gain. Oregon taxes capital gains as ordinary income, with a top marginal rate of 9.9%. Oregon does not impose a general nonresident real estate withholding at the state level in the same manner as some states, though sellers should confirm current requirements at closing.
Oregon is a clawback state. When Oregon property is exchanged for replacement property outside Oregon, the taxpayer must file Form 24 for the year of the exchange and annually thereafter, until the deferred Oregon-source gain is recognized, preserving Oregon's ability to tax that gain.
Market snapshot
Portland is Oregon's dominant market, with Eugene, Salem, and Bend forming secondary metros. Multifamily and industrial and logistics space lead investor demand, supported by net-lease retail and activity tied to the region's technology and manufacturing base.
Land-use planning and urban growth boundaries constrain supply and support values, while Bend and other smaller metros have drawn lifestyle-driven in-migration. The combination of a high state tax rate and appreciated values makes Oregon owners active users of tax-deferred exchange strategies.
Why 1031 & DST investors look here
- High 9.9% top rate makes deferral especially valuable
- Supply-constrained Portland and fast-growing Bend markets
- Owners seeking passive management and out-of-state diversification
Replacement-property options
Replacement property does not need to be in Oregon — like-kind real estate is nationwide, and Oregon's high rate often motivates owners to reinvest elsewhere. DSTs, 721 UPREIT structures, and Opportunity Zone investments let Oregon owners exchange into passive, professionally managed assets; when the replacement is out of state, the annual Form 24 filing keeps the deferred Oregon gain properly reported.
Frequently asked questions
Does Oregon tax a 1031 exchange?
Oregon conforms to Section 1031, so a valid exchange defers Oregon tax; the deferred gain is taxed at up to 9.9% when eventually recognized.
Can I exchange Oregon property for out-of-state DSTs?
Yes, but Oregon's clawback rule requires you to file Form 24 for the exchange year and each year after, until the deferred Oregon-source gain is recognized.
What is Oregon Form 24?
Form 24 is Oregon's annual reporting form for gain deferred in a 1031 exchange into out-of-state property, preserving the state's ability to tax that gain when it is later recognized.
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.