1031 Exchange Rules in New Hampshire
Last reviewed: June 2026. State rules change. Verify current rules before closing.
What Is Different in New Hampshire
New Hampshire has no broad income tax, no tax on real estate capital gains for individuals, no withholding at closing, and no state exchange paperwork. Even the old interest and dividends tax is gone, fully repealed in 2025. The one state charge that does apply is the real estate transfer tax, and a 1031 exchange does not avoid it.
Does New Hampshire Conform to IRC Section 1031?
For individual investors there is nothing to conform to, because New Hampshire does not tax individual capital gains. A 1031 exchange is an IRS-approved way to sell investment property and buy replacement property without paying tax on the gain right away. In New Hampshire, the exchange is a federal matter. Our 1031 exchange guide walks through how it works.
New Hampshire Tax Rate on Real Estate Gains
Zero for individuals. New Hampshire has no broad personal income tax and no capital gains tax on real estate sales by individuals.
Withholding at Closing
None. New Hampshire has no withholding requirement on real estate sales, for residents or nonresidents.
The Transfer Tax Catch
New Hampshire charges a real estate transfer tax of $0.75 per $100 of price, paid by the buyer and the seller, each. A 1031 exchange is not excluded from it. On a $1,000,000 sale that is $7,500 from each side. It is a transaction cost, not an income tax, so an exchange cannot defer it. Budget for it.
Federal Taxes Still Apply
Without an exchange, a New Hampshire sale faces three federal layers.
Example: $1,000,000 sale of a New Hampshire 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.
| Tax | Calculation | Amount |
|---|---|---|
| Federal depreciation recapture | $100,000 x 25% | $25,000 |
| Federal long-term capital gains | $400,000 x 20% | $80,000 |
| Net investment income tax | $500,000 x 3.8% | $19,000 |
| New Hampshire income tax | none | $0 |
| Total potential tax | up to $124,000 |
Figures are illustrative and rounded. Your rates depend on income, filing status, and basis. A qualifying 1031 exchange may defer all three federal layers. Run your numbers with our 1031 exchange calculators, then confirm them with your tax advisor.
Crossing State Lines
New Hampshire sits next to three states with real 1031 rules, and border investors cross them constantly.
- Selling in Massachusetts, buying in New Hampshire. No Massachusetts withholding at closing, but Massachusetts keeps a claim: under its regulations, the deferred gain that reflects appreciation of Massachusetts real estate is Massachusetts-source income when you later sell in a taxable sale.
- Selling in Maine, buying in New Hampshire. Maine withholds 2.5% of the price on sales of $100,000 or more unless Maine Revenue Services approves a Form REW-5 exemption before closing. File it electronically and allow at least 5 business days.
- Selling in Vermont, buying in New Hampshire. Vermont withholds 2.5% of the price unless a Commissioner's Certificate is in hand, and Vermont's separate Land Gains Tax can apply to land held under six years.
Risks to Keep in Mind
- Federal deadlines are unforgiving. You have 45 days to identify replacement property and 180 days to close. See the IRS rules for 1031 exchanges.
- Boot is still taxable. Cash you take out or debt you fail to replace can create recognized gain, even with no state tax in play.
- Deferral is not elimination. The federal tax comes due when you eventually sell without exchanging, unless your estate plan uses the step-up in basis. Ask your estate planning attorney.
- Out-of-state obligations follow you. A prior exchange out of a claw-back state (California, Oregon, Montana, or Massachusetts) can carry filing duties into your new ownership.
New Hampshire 1031 Exchange FAQs
Does New Hampshire tax 1031 exchanges?
No. There is no broad income tax and no capital gains tax on individuals, so there is no state tax to defer.
Does the transfer tax apply to my exchange?
Yes. The real estate transfer tax applies to deeds regardless of 1031 treatment. It is a transaction cost, not a deferrable income tax.
Why bother with a 1031 exchange in New Hampshire if there is no state tax?
Federal taxes. Capital gains, depreciation recapture, and the net investment income tax can take more than a quarter of a typical gain. An exchange may defer all of it.
Do I still need a qualified intermediary?
Yes. The qualified intermediary requirement is federal. You cannot touch the sale proceeds and still qualify for deferral, no matter what state you are in.
Sources
- Internal Revenue Service, Like-Kind Exchanges, Real Estate Tax Tips
- Tax Foundation, State Individual Income Tax Rates and Brackets, 2026
- 830 CMR 62.5A.1(3)(d) (Massachusetts nonresident sourcing, cross-state reference)
Want to learn more? Our 1031 exchange guide covers the full process from sale to replacement. Ready to start a New Hampshire 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 New Hampshire 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 New Hampshire 1031 exchange services to get started.
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Disclaimer: This content is for informational purposes only and does not constitute legal or tax advice. Consult your tax advisor or attorney for advice specific to your situation.