1031 Exchange Rules in Oregon

Last reviewed: June 2026. State rules change. Verify current forms before closing.

What Is Different in Oregon

Oregon is, alongside California, the most compliance-heavy state in the country for a 1031 exchange — it hits you at both ends. At closing, the escrow agent must withhold from a nonresident seller unless you deliver a written affirmation that the transfer qualifies under Section 1031 (Form OR-18-WC). After the exchange, if your replacement property is outside Oregon, the deferred gain stays on Oregon’s books: Schedule OR-24 must be filed every year until you dispose of the replacement property, and ORS 316.738 adds the deferred gain back to Oregon income when you do. With a 9.9% top rate, the stakes match the paperwork.

Does Oregon Conform to IRC Section 1031?

Yes. Oregon follows the federal like-kind exchange rules for real property. A 1031 exchange is an IRS-approved way to sell investment property and buy replacement property without paying tax on the gain right away. If your exchange qualifies for federal deferral, Oregon defers its income tax too. New to exchanges? Start with our 1031 exchange guide.

Like California, Oregon defers the tax — it does not forgive it. Gain built up on Oregon property remains Oregon-source income wherever your replacement property sits. More on that below.

Oregon Tax Rate on Real Estate Gains

Oregon’s top income tax rate is 9.9% for 2026, one of the highest in the country, and it applies to capital gains as ordinary income. On a $500,000 gain, that can mean up to roughly $49,500 of state tax in addition to the federal bill. A qualifying exchange may defer all of it.

Nonresident Withholding at Closing

Under ORS 314.258, the closing agent must withhold on a conveyance by a nonresident seller unless an exemption applies. The required amount is the least of:

• 4% of the total consideration (sales price),
• 8% of the gain includable in Oregon taxable income, or
• the net proceeds payable to the seller.

No withholding applies if the consideration is $100,000 or less. Absent your affirmation, the closing agent withholds — it is not optional for them.

How 1031 Exchangers Claim the Exemption: Form OR-18-WC

The exemption is a written affirmation, made under penalty of perjury on Form OR-18-WC, that the conveyance qualifies for nonrecognition under IRC Section 1031 (or 1033). Deliver it to the closing agent at or before closing — there is no state pre-approval or waiting period. Your qualified intermediary documents the exchange that supports the affirmation. A qualified intermediary is the independent party that holds your sale proceeds during an exchange. WealthBuilder 1031 prepares the exchange documentation that backs up the OR-18-WC.

Boot changes the math: gain you recognize is includable in Oregon income, and the affirmation covers only the deferred portion.

The Claw-Back: ORS 316.738 and Schedule OR-24

If you exchange Oregon property for replacement property outside Oregon, the deferred gain remains Oregon-source income. The tracking mechanism is Schedule OR-24 (Like-Kind Exchanges), filed with your Oregon return in the year of the exchange and every year after, until you dispose of the replacement property. When you sell in a taxable transaction, ORS 316.738 adds the deferred gain back to Oregon income.

Like California’s FTB 3840 — and unlike Montana’s and Massachusetts’ quiet versions — Oregon’s claw-back comes with an annual filing. Missing it invites the Department of Revenue to ask questions about the entire deferred gain. Put OR-24 on your annual tax calendar, and make sure your preparer knows the exchange history.

If you keep exchanging, deferral continues. The Oregon tax comes due only at a taxable disposition, or can be eliminated for heirs through the step-up in basis at death — talk to your estate planning attorney.

Federal Taxes Still Apply

An Oregon exchange defers two layers: federal and state. Here is what a taxable sale looks like without an exchange, using round numbers.

Example: $1,000,000 sale of an Oregon rental. Original purchase $600,000, with $100,000 of depreciation taken, so the adjusted basis is $500,000 and the total gain is $500,000.

Figures are illustrative and rounded. Your rates depend on income, filing status, and basis. A qualifying 1031 exchange may defer the entire amount. Run your own numbers with our 1031 exchange calculators, then confirm them with your tax advisor.

Risks and Things That Go Wrong in Oregon Exchanges

• Missed Schedule OR-24 filings. The most common long-tail mistake. The annual filing continues until the replacement property is disposed of — even if you no longer live in Oregon.
• No affirmation at closing. Without the OR-18-WC, the closing agent must withhold — up to 4% of the full price — and you wait for a refund while your exchange runs short of equity.
• Boot surprises. Cash taken at closing or mortgage relief not offset with new debt or additional cash becomes recognized gain, which is includable in Oregon income now.
• Failed deadlines. The federal 45-day identification and 180-day completion rules apply with no state extensions. See the IRS rules for 1031 exchanges.
• Deferral is not elimination. ORS 316.738 adds the deferred gain back to Oregon income at the eventual taxable sale. Plan the exit, not just the exchange.

Oregon 1031 Exchange FAQs

Does Oregon withhold on my sale if I do a 1031 exchange?
Not if you deliver Form OR-18-WC — a written affirmation under penalty of perjury that the conveyance qualifies under Section 1031 — to the closing agent at or before closing.

How much does Oregon withhold without the affirmation?
The least of 4% of the sales price, 8% of the gain includable in Oregon income, or your net proceeds. Sales of $100,000 or less are exempt.

What is Schedule OR-24?
Oregon’s like-kind exchange tracking schedule. If your replacement property is outside Oregon, you file it with your Oregon return every year until you dispose of the replacement property.

Can I exchange Oregon property for property in another state?
Yes. But the deferred Oregon gain stays Oregon-source: Schedule OR-24 follows you annually, and ORS 316.738 adds the gain back to Oregon income when you sell in a taxable transaction.

What happens if my exchange fails after closing?
The exemption affirmation no longer holds — withholding and Oregon tax apply to the recognized gain. Work with a QI who understands Oregon’s two-ended compliance.

Sources

• ORS 314.258 (withholding on real property conveyances); Or. Admin. R. 150-314-0258
• ORS 316.738 (addition for gain deferred in out-of-state exchanges)
• Oregon DOR, Form OR-18-WC and Schedule OR-24 instructions
• Tax Foundation, State Individual Income Tax Rates and Brackets, 2026

Want to learn more? Our 1031 exchange guide covers the full process from sale to replacement. Ready to start an Oregon exchange? WealthBuilder 1031 is attorney-owned, serves all 50 states, and charges a flat $1,000 fee. Start at WealthBuilder1031.com or call 888-508-1901.

This page does not constitute legal or tax advice. Consult your attorney and tax advisor about your specific situation.

Ready to start your Oregon 1031 exchange? WealthBuilder 1031 acts as your qualified intermediary for a flat $1,000 fee, $750 at your sale and $250 at your purchase. See our Oregon 1031 exchange services to get started.