Does Nebraska recognize 1031 exchanges?
Yes. A Nebraska 1031 exchange is treated the same way for state tax as it is federally. Nebraska’s individual return, Form 1040N, starts from federal adjusted gross income, and the Nebraska Revenue Act refers to the Internal Revenue Code of 1986 as amended (Nebraska Revised Statutes 77-2701.01). Gain you defer under Section 1031 never enters federal AGI, so it never reaches your Nebraska return.
What an exchange is worth in Nebraska
In 2026, a high-income seller’s Nebraska tax on a gain is 4.55%, the top rate under 77-2715.03, reached above $49,530 of taxable income on a joint return. On a $1,000,000 gain, an exchange defers $45,500 of Nebraska tax, plus the federal capital gains, recapture and net investment income taxes, which together are usually five to six times larger.
The top rate falls to 3.99% for tax years beginning in 2027. That lowers the Nebraska tax on any boot recognized in 2027 or later, and on deferred gain you eventually recognize when you sell the replacement, if the rate is still 3.99% then. Nebraska offers no capital gains exclusion for real estate; its only special capital gains election, on Form 4797N, is for employer stock.
Deferral can run a long time. Each exchange carries your old basis into the new property, so the deferred gain grows with every trade. If you hold the last replacement until death, federal law generally gives heirs a basis equal to fair market value at that date (26 U.S.C. 1014), and because Nebraska starts from federal AGI, the deferred gain would not show up on a Nebraska return either.
Federal 1031 rules that apply in Nebraska
Nebraska adds no deadlines, so the federal timeline controls. You have 45 days from the sale to identify replacement property in writing and 180 days, or your return due date if earlier, to close on it. Both properties must be real property held for business or investment use, and a qualified intermediary must hold the proceeds.
To defer all the gain, buy replacement property of equal or greater value and reinvest all the net cash. Boot is anything you get that is not like-kind property: cash you keep, or debt relief that is not offset by new debt or added cash. Our guide to 1031 exchange rules covers identification and boot in detail, and the complete 1031 exchange guide walks through how exchanges work from start to finish.
Nebraska withholding at closing
We did not find a Nebraska rule on the Department of Revenue’s pages that requires a closing agent to withhold income tax from a seller’s proceeds on a real estate sale. Nebraska’s requirement is that the gain be reported. A nonresident with income from Nebraska sources files Form 1040N with Schedule III, which counts gain or loss from Nebraska sources.
In a full exchange there is no recognized gain. In a partial exchange, the boot is taxable in the year of the sale, so plan an estimated payment. Nebraska’s 2026 Form 1040N-ES has the rate schedules for figuring it.
The documentary stamp tax in a Nebraska exchange
An exchange does not change who pays Nebraska’s documentary stamp tax. Under 76-901, as amended by LB 1067 (2026), the tax falls on the grantor executing the deed at $3.32 per $1,000 of value from July 18, 2026 until January 1, 2032, when it drops to $2.32.
If you sell a Nebraska building and buy another Nebraska building, you pay the stamp tax on the deed you sign as seller. On a $1,800,000 sale, that is $5,976. It is a selling expense that can be paid from exchange funds at closing, and it reduces the net proceeds you have to reinvest.
Does Nebraska have a 1031 clawback?
No. Nebraska does not require annual filings or keep a claim on deferred gain when you exchange Nebraska property for property in another state. The states with tracking or clawback rules are California, Massachusetts, Montana and Oregon.
That gives Nebraska owners room to move. An Omaha owner who exchanges into a building in Arizona and later becomes an Arizona resident files no Nebraska tracking forms on the replacement. Keep your exchange paperwork with the replacement property’s records anyway, since your basis and holding period carry over and you will need them when you sell.
Does Nebraska regulate qualified intermediaries?
No. Nebraska is not one of the nine states with an exchange facilitator law, which are California, Colorado, Connecticut, Idaho, Maine, Nevada, Oregon, Virginia and Washington. No Nebraska statute sets a bond, insurance or trust account requirement for the company holding your exchange money.
That puts the burden on you to check the intermediary. Ask for these in writing before you sign:
- How the funds are held, in a segregated account or a pooled one, and who can authorize a withdrawal.
- The amount of its fidelity bond and errors and omissions coverage.
- Whether you get account statements and how interest is handled.
- Confirmation that it has not been your attorney, CPA, employee or broker in the past two years.
Common 1031 exchange paths for Nebraska owners
Nebraska exchanges usually follow one of three paths.
Nebraska to Nebraska is common for owners consolidating a scattered portfolio, such as selling three small buildings in Lincoln to buy one larger property in west Omaha. Expect to pay the stamp tax on each deed you sign as seller, and underwrite the new building at its likely revalued assessment, since Nebraska revalues every January 1 and Douglas County averages above 2%.
Nebraska to another state is often about property tax as much as income tax. Owners in high-rate counties exchange into states with lower property tax or no income tax. Nebraska asks for no extra filings, but the new state taxes the gain when you sell there.
Out of state into Nebraska brings no Nebraska clawback. A seller from California or Oregon may still owe that state annual filings on the deferred gain.
Worked example: a Nebraska exchange with mortgage boot
An owner sells a 22-unit building in Lincoln for $1,800,000. Selling costs are $90,000 plus the $5,976 stamp tax, $95,976 in all. The building cost $1,150,000 and has $400,000 of depreciation, for an adjusted basis of $750,000, so the gain is $954,024. The old loan payoff is $700,000.
After the payoff, $1,004,024 of net cash goes to the intermediary. The owner reinvests all of it and buys a building in Omaha for $1,504,024 with a new $500,000 loan, adding no outside cash. The debt paid off is $200,000 more than the new debt, and the replacement costs $200,000 less than the $1,704,024 net sale price, so there is $200,000 of mortgage boot. Gain of $200,000 is recognized and $754,024 is deferred.
At the 2026 top rate of 4.55%, Nebraska tax on the boot is $9,100 and the Nebraska tax deferred is about $34,308. If the sale closed in 2027, the boot would be taxed at 3.99%, or $7,980. The owner could have avoided the boot by borrowing $700,000 or more on the replacement, or by adding $200,000 of outside cash.
| Item | Amount |
|---|---|
| Sale price | $1,800,000 |
| Selling costs, including stamp tax | $95,976 |
| Adjusted basis | $750,000 |
| Total gain | $954,024 |
| Mortgage boot ($700,000 paid off, $500,000 new loan) | $200,000 |
| Gain deferred | $754,024 |
| Nebraska tax on boot (4.55%) | $9,100 |
| Nebraska tax deferred (4.55%) | $34,308 |
Underwriting a Nebraska replacement property
If the replacement is in Nebraska, budget its property tax at the price you are paying, not the seller’s current bill. Nebraska values real property at 100% of actual value every January 1, there is no cap on how fast one property’s value can rise, and the assessor can use your purchase price as evidence. At Douglas County’s 2025 average rate of 2.0381%, every $100,000 of added value costs about $2,038 a year.
Two state credits come off each statement: the Real Property Tax Credit, $118.87 per $100,000 of value for 2026, and a School District Property Tax Relief Credit that varies by parcel. Our page on the property tax rate in Nebraska covers both, along with the June 30 protest deadline. Getting the tax line right matters in an exchange, because the 45-day window leaves little time to fix a bad assumption.
Timeline tips for a Nebraska exchange
Start looking for the replacement before the sale closes. The 45 days start at closing and do not pause for weekends or holidays.
- Sign the exchange agreement and assign the sale contract before closing.
- Tell the title company the sale is part of an exchange so proceeds go to the intermediary.
- If you sell late in the year, file an extension so your return due date does not cut the 180 days short.
- If you expect boot, weigh a January closing, when the top rate drops to 3.99%.
- Match or exceed your old loan balance on the replacement to avoid mortgage boot.
Selling a Nebraska apartment building as part of an exchange
Skyline buys apartment buildings with five or more units in Nebraska. We buy directly, close on your timeline, and can work inside 1031 deadlines. We work with your intermediary on the contract assignment and can set a closing date that gives you time to find a replacement before your 45 days start.
For the tax you would owe without an exchange, see Nebraska capital gains tax on real estate. The 1031 exchange calculator runs the federal side with your own numbers.
Selling? Spread the tax with seller-carry terms
If a large tax bill is what is keeping you from selling, an installment sale may help. When you carry part of the price as a note, the gain is generally reported as you receive payments instead of all in the year of sale. Some parts of the gain, such as certain depreciation recapture, can still be due up front, so run the numbers with your CPA first.
Skyline Capital Investments buys apartment buildings with five or more units and can offer seller-carry terms, or a delayed closing that fits your 1031 timeline. Send the address and unit count and we typically respond within 48 hours. How seller financing works · How an installment sale is taxed · Seller financing calculator.
Get A Seller-Carry Offer
