Does Oregon recognize 1031 exchanges?
Yes. An Oregon 1031 exchange is treated the same way it is federally, because Oregon starts its income tax from federal taxable income and follows Section 1031 of the Internal Revenue Code. Senate Bill 1507 (2026) moved Oregon’s tie to the Code forward two years, to the end of 2025, and the Legislature’s summary of the bill lists no change to like-kind exchanges.
That matters more in Oregon than in most states. Oregon taxes gains as ordinary income at rates up to 9.9%, so on a large apartment sale the state share of the tax is close to a tenth of the gain. Deferring it is often worth as much as deferring the federal capital gains tax.
Federal 1031 rules that apply in Oregon
Oregon adds no deadlines of its own, 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 investment or business use, and a qualified intermediary must hold the proceeds so you never receive them.
To defer all the gain, buy a replacement of equal or greater value and reinvest all the net cash. Any cash you keep or debt you are relieved of without replacing it is boot, and it is taxed by both the IRS and Oregon. Our guide to 1031 exchange rules sets out the identification tests and boot rules in full, and the complete 1031 exchange guide covers how exchanges work from start to finish.
Oregon’s clawback rule: Form OR-24
If you exchange Oregon property for property outside Oregon, you must file Form OR-24 for the year of the exchange and for every year after until you dispose of the replacement property. Oregon uses the form to track the deferred Oregon-source gain and keeps the right to tax it.
In practice, that means the gain you build up on an Oregon building stays taxable by Oregon even after you move the money to Idaho, Texas or anywhere else. When you eventually sell the out-of-state property in a taxable sale, Oregon can tax the deferred Oregon gain, whether or not you still live in Oregon. Moving out of the state after the exchange does not end the obligation.
Oregon is one of the few states with a tracking rule of this kind, alongside California, Massachusetts and Montana. Keep the original exchange paperwork and a copy of every OR-24 you file with the replacement property’s records, since the buyer of that property years from now is not the one who has to prove the Oregon gain.
| Exchange path | OR-24 required? | What Oregon keeps |
|---|---|---|
| Oregon property to Oregon property | No | The gain stays in an Oregon property and is taxed when it is sold |
| Oregon property to out-of-state property | Yes, every year until disposal | The right to tax the deferred Oregon-source gain |
| Out-of-state property to Oregon property | No | Future Oregon gain on the new property |
Oregon withholding at closing and how an exchange affects it
When a nonresident sells Oregon real property, the escrow agent must withhold the smallest of 4% of the price, 8% of the gain includable in Oregon taxable income, or the net proceeds paid out, and report it on Form OR-18-WC. Oregon residents selling as individuals, pass-through entities that file Form OR-20-S or OR-65, and Oregon-registered C corporations are exempt.
There is no blanket exemption for a 1031 exchange. A seller in an exchange is still a transferor. What changes is the size of the smallest figure. In the Department of Revenue’s like-kind example, money escrow sends to the qualified intermediary is not disbursed to the seller, so withholding is limited to the net proceeds escrow actually pays the seller at closing. Recognized gain also limits the 8%-of-gain option. A nonresident who sends every dollar to the intermediary usually has nothing withheld.
- Tell escrow at the start that the sale is part of an exchange and give them the intermediary’s details.
- Expect withholding on any cash escrow pays you at closing. Cash you get back from the intermediary later is still taxable boot.
- Sales of $100,000 or less, and sales where the amount to be withheld would be under $100 per seller, are exempt.
Does Oregon regulate qualified intermediaries?
Yes. Oregon is one of nine states with a law regulating exchange facilitators, along with California, Colorado, Connecticut, Idaho, Maine, Nevada, Virginia and Washington. Oregon’s rules come from Oregon Laws 2013, chapter 392 (House Bill 3495), which took effect January 1, 2014.
The law protects the money an intermediary holds for you between the sale and the purchase, which can be the largest check you ever write.
- A fidelity bond of at least $1 million.
- Errors and omissions coverage of at least $250,000.
- Exchange funds held in qualified escrow or trust accounts that need dual authorization for withdrawals.
- Funds invested under the prudent investor standard.
- Notice to clients within 10 business days of a change in control of the facilitator.
- A client who is harmed can sue on the bond.
Choosing an intermediary for an Oregon exchange
Ask any intermediary to show you its Oregon bond and E&O coverage in writing before you sign the exchange agreement. Then ask how your funds will be held: in a separate account in your name or a pooled account, who must sign to move money, and whether you get statements. If the intermediary is based in another state, ask whether it has worked Oregon deals before, how it meets the Oregon bond and account rules, and how it coordinates OR-18-WC reporting with escrow.
Your intermediary also cannot be your agent from the past two years, such as your attorney, CPA, employee or real estate broker. Our guide to choosing a 1031 qualified intermediary covers fees, contract terms and what to check.
Common 1031 exchange paths for Oregon owners
Most Oregon exchanges follow one of three paths, and the choice decides your filing load for years.
Oregon to Oregon is the simplest. An owner who trades a Portland fourplex portfolio for a larger building in Salem or Eugene files no OR-24, and nonresident withholding is not an issue for residents.
Oregon to out-of-state is common for owners who want to leave the state rent cap or chase lower property taxes elsewhere. It works, but it adds an OR-24 filing every year until the replacement is sold, and a nonresident seller faces escrow withholding on any cash taken at closing.
Out-of-state to Oregon carries no Oregon clawback filing. A seller coming from a state with its own tracking rule, such as California, may still owe filings to that state.
Worked example: an Oregon exchange into another state
An owner living in Washington sells a 16-unit building in Portland for $2,000,000. After $100,000 of selling costs and with an adjusted basis of $750,000, the gain is $1,150,000. The $900,000 loan is paid off, the owner takes $100,000 in cash at closing, and the intermediary receives the other $900,000.
The owner buys a $2,100,000 building in Boise with the $900,000 of exchange funds and a new $1,200,000 loan. The $100,000 taken at closing is boot, so $100,000 of gain is recognized and $1,050,000 is deferred. At Oregon’s 9.9% rate, the Oregon tax on the boot is about $9,900, and the tax deferred is about $103,950.
Escrow withholding on the Portland sale is the smallest of $80,000 (4% of $2,000,000), $8,000 (8% of the $100,000 recognized gain) and $100,000 (net proceeds paid to the seller). So escrow withholds $8,000, which the owner claims on an Oregon nonresident return.
Because the replacement is in Idaho, the owner files Form OR-24 for the exchange year and every year after. If the Boise building is later sold in a taxable sale, Oregon can tax the $1,050,000 of deferred Oregon gain. Had the owner sent all $1,000,000 to the intermediary, reinvested it and taken no cash, the entire $1,150,000 would be deferred and nothing would be withheld.
| Item | Amount |
|---|---|
| Sale price | $2,000,000 |
| Total gain | $1,150,000 |
| Cash boot taken | $100,000 |
| Gain deferred | $1,050,000 |
| Oregon tax on boot (9.9%) | $9,900 |
| Oregon tax deferred (9.9%) | $103,950 |
| Escrow withholding | $8,000 |
Timeline tips for an Oregon exchange
Plan the replacement before the sale closes. The 45-day clock starts at closing, and owners who leave the state often need to tour buildings in another market inside that window.
- Sign the exchange agreement and assign the sale contract before closing, not at the table.
- Confirm the intermediary’s Oregon bond and coverage when you sign.
- If you sell late in the year, file an extension so your return due date does not cut the 180 days short.
- Put an OR-24 reminder on your calendar each spring if the replacement is outside Oregon.
- Keep a separate Oregon depreciation schedule for the replacement; SB 1507 stops Oregon following federal bonus depreciation from 2026.
Selling an Oregon apartment building as part of an exchange
Skyline buys apartment buildings with five or more units in Oregon. 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 Oregon capital gains tax on real estate. The 1031 exchange calculator runs the federal side for 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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