Does New Hampshire recognize 1031 exchanges?
Yes, in the sense that matters. New Hampshire has no individual income tax on capital gains, so for an individual who owns a building directly there is no state income tax for an exchange to defer. The federal deferral works the same as anywhere else.
For a business organization that files the Business Profits Tax (BPT), the exchange carries through. The DRA’s BPT return for proprietorships reports net rental profit from federal Schedule E and gain on business assets from federal Form 4797, so gain that is deferred on the federal return under Section 1031 is not reported as business profits either. The DRA says the BPT rate is 7.5% and a return is required when gross business income exceeds $109,000, for periods beginning January 1, 2025; RSA 77-A:6 adjusts that figure every two years, so it also applies to 2026.
Federal 1031 rules that apply in New Hampshire
New Hampshire adds no deadlines. 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 investment or business use, and a qualified intermediary has to hold the money so you never have access to it.
Full deferral requires buying replacement property of equal or greater value and reinvesting all the net cash. Cash you keep, and debt you shed without replacing it, is boot and is taxed federally, and for a BPT filer the recognized gain lands on the BPT return. Our guide to 1031 exchange rules covers identification and boot, and the main 1031 exchange guide covers the process from start to finish.
New Hampshire withholding at closing
There is none. New Hampshire has no income tax withholding when a resident or nonresident sells real estate, because individuals owe no New Hampshire income tax on the gain. There is no state affidavit or exemption certificate to file to protect an exchange.
The only federal withholding at closing is FIRPTA, which applies to foreign sellers. A U.S. seller exchanging out of a New Hampshire building has one less form to manage than in states such as Georgia or Oregon, which withhold from nonresidents unless an exemption is claimed.
Transfer tax on both sides of the exchange
The real estate transfer tax is the New Hampshire cost an exchange does not change. RSA 78-B taxes the sale or transfer of real estate at $0.75 per $100 of price, and RSA 78-B:4 applies that rate to both the buyer and the seller. RSA 78-B:2 lists the exempt transfers, and a like-kind exchange is not on the list.
So an owner who sells one New Hampshire building and buys another pays twice: the seller’s share on the relinquished property and the buyer’s share on the replacement. Deeding through a qualified intermediary does not remove the tax. Budget for it as an exchange cost, and remember it counts as a selling expense or part of the replacement’s basis for federal purposes.
| Deed | Who pays | Rate |
|---|---|---|
| Sale of the New Hampshire relinquished property | You, as seller (buyer pays its own half) | $0.75 per $100 |
| Purchase of a New Hampshire replacement | You, as buyer (seller pays its own half) | $0.75 per $100 |
| Purchase of an out-of-state replacement | Set by that state | Varies |
Does New Hampshire have a 1031 clawback?
No. With no individual income tax, New Hampshire has nothing to claw back, and it has no tracking filing for exchanges into other states. The clawback states are California, Massachusetts, Montana and Oregon.
Massachusetts is the one to watch for southern New Hampshire owners who live across the border or who bought with proceeds from a Massachusetts exchange. If your deferred gain started in Massachusetts, expect Massachusetts rules to follow it, even though New Hampshire adds nothing. Ask a CPA who handles both states before you plan the next sale.
Does New Hampshire regulate qualified intermediaries?
No. New Hampshire is not one of the nine states with a law regulating exchange intermediaries, which are California, Colorado, Connecticut, Idaho, Maine, Nevada, Oregon, Virginia and Washington. A New Hampshire intermediary needs no state license or bond to hold your proceeds.
Maine’s law can still be relevant if you exchange across the border, so ask how the intermediary handles a Maine purchase. For any intermediary, ask in writing for:
- Proof of fidelity bond and errors and omissions coverage, with the amounts.
- Whether your funds sit in a separate account in your name or a pooled account.
- Whether withdrawals need two signatures, and how often you get statements.
- Confirmation that it is not your agent from the past two years, such as your attorney, CPA, employee or broker, which federal rules bar.
Common 1031 exchange paths for New Hampshire owners
Most New Hampshire exchanges follow one of three paths, and the transfer tax and the BPT treat each one a little differently.
New Hampshire to New Hampshire keeps the BPT filing in one place and costs transfer tax on both deeds. An owner trading two older Manchester buildings for one newer property in Dover or Portsmouth pays the seller’s share on each sale and the buyer’s share on the purchase.
New Hampshire to another state replaces the second New Hampshire transfer tax with whatever the new state charges, and the new state’s income tax rules apply to the replacement from then on. Owners moving into Maine, Florida or other states should check the destination’s withholding and tax rules before they identify a property.
Another state into New Hampshire, for example from Massachusetts, is the third path. New Hampshire will not tax a future gain for an individual, but a BPT filing may follow if the rental activity crosses the threshold, and the old state’s clawback, if any, still applies.
Boot and partial exchanges for BPT filers
Boot is taxed federally in the year of the exchange, and for a BPT filer the recognized gain also shows up on the BPT return. Say an owner takes $100,000 of cash out of an exchange. That $100,000 is recognized gain on the federal return, and at the 7.5% BPT rate it could add up to $7,500 of BPT before deductions.
An individual who is not required to file the BPT owes no New Hampshire tax on the boot at all. Whether you file depends on your gross business income for the year, so ask your preparer before you decide how much cash to take at closing.
Seller financing is another option that changed in 2025. With the Interest and Dividends Tax repealed for periods after 2024, interest on a note you carry back is no longer taxed by New Hampshire for an individual, though installment sellers remain BPT filers until every installment is reported.
Worked example: a New Hampshire to New Hampshire exchange
An owner sells a 16-unit building in Manchester for $2,000,000. Selling costs are $90,000, including the seller’s $15,000 transfer tax. The adjusted basis is $810,000 after $380,000 of depreciation, so the gain is $1,100,000. At closing the $900,000 loan is paid off, and the intermediary receives the remaining $1,010,000.
The owner buys a $2,300,000 building in Dover with the $1,010,000 and a new $1,290,000 loan. No cash comes out and the debt is more than replaced, so the full $1,100,000 gain is deferred. For a married couple in the top brackets, the federal tax deferred is about $280,800: $95,000 on the depreciation at 25%, $144,000 on the other $720,000 of gain at 20% and $41,800 of net investment income tax.
If the owner files the BPT, none of the $1,100,000 gain goes on that return. At 7.5%, keeping that gain out of business profits avoids up to $82,500 of BPT before any deductions. The exchange does not change the transfer tax: the owner pays $15,000 on the sale and $17,250 as buyer of the Dover building, $32,250 in total.
| Item | Amount |
|---|---|
| Sale price | $2,000,000 |
| Total gain | $1,100,000 |
| Gain deferred | $1,100,000 |
| Federal tax deferred (estimate) | $280,800 |
| BPT on gain kept off the return, at 7.5% (upper bound) | $82,500 |
| Transfer tax on sale (seller share) | $15,000 |
| Transfer tax on purchase (buyer share) | $17,250 |
Timeline tips for a New Hampshire exchange
Line up the replacement before the sale closes. The 45-day identification window starts at closing, and touring and underwriting buildings in a smaller market can take most of it.
- Sign the exchange agreement and assign the sale contract to the intermediary before closing.
- Budget for transfer tax on both deeds; the exchange does not reduce it.
- If you file the BPT, tell your preparer the sale was an exchange so the federal deferral carries to that return.
- If you sell late in the year, extend your federal return so the due date does not cut the 180 days short.
- If the deferred gain started in a clawback state such as Massachusetts, check that state’s filing rules.
Selling a New Hampshire apartment building as part of an exchange
Skyline buys apartment buildings with five or more units in New Hampshire. 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 first.
For the taxes you would owe without an exchange, see New Hampshire 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.
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