Georgia Capital Gains Tax on Real Estate

By Skyline Capital Investments · Updated October 26, 2026 · 6 min read

Does Georgia have a capital gains tax?

Georgia has no separate capital gains tax, but it taxes gains from selling real estate as part of ordinary income at its flat individual rate of 4.99% for 2026. Governor Kemp signed HB 463 on May 11, 2026, lowering the rate from 5.19% to 4.99% starting January 1, 2026, according to the Governor’s office. The bill also provides for further yearly cuts, so the rate in the year you close may be lower still.

Because the rate is flat, every dollar of gain is taxed the same way. A $90,000 gain on a fourplex in Macon and a $1.2 million gain on a 40-unit building in Gwinnett County both pay 4.99%. Georgia capital gains tax on a large apartment sale is usually a quarter or less of the total bill, with the federal side doing most of the damage.

Georgia income tax rate for 2026

Georgia has no brackets: one rate applies to all taxable income. For 2026 it is 4.99%, and it applies to wages, rents and capital gains alike. HB 463 also raised the standard deduction for 2026, which trims taxable income slightly for every filer.

HB 463 provides for further annual cuts toward a 3.99% floor. BDO’s summary of the bill describes steps of 0.125 percentage points that depend on the state meeting revenue conditions, so a cut for 2027 is not automatic. Ask your CPA to confirm the rate for the year you plan to close. The table shows only the rates that are already set.

How Georgia tax stacks on federal tax

You pay Georgia tax and federal tax on the same gain, but only the federal return splits the gain into layers with different rates. For 2026, IRS Revenue Procedure 2025-32 puts the start of the 20% long-term rate above $613,700 of taxable income for joint filers and $545,500 for single filers. The 0% rate covers income up to $98,900 joint and $49,450 single, with 15% in between.

Federal law taxes the straight-line depreciation you took as unrecaptured Section 1250 gain at up to 25%, and the 3.8% net investment income tax applies once modified adjusted gross income passes $250,000 joint or $200,000 single. Georgia ignores all of those layers and charges 4.99% on the whole gain.

Short-term vs long-term gains in Georgia

Georgia taxes short-term and long-term gains at the same 4.99% rate. Holding a building eleven months or eleven years makes no difference to the state.

It matters a great deal federally. A sale after one year or less is taxed at ordinary rates up to 37%, against 20% at most for long-term gain. If a flip or a short hold is close to the one-year line, waiting past it can save far more federal tax than any Georgia planning.

Depreciation recapture and the bonus depreciation gap

Georgia has no special recapture rate, so depreciation you claimed comes back into income at 4.99% along with the rest of the gain. The catch is that your Georgia depreciation may not match your federal depreciation.

Georgia has not adopted the 30%, 50% and 100% bonus depreciation rules of IRC Section 168(k). The Department of Revenue’s 2025 Form 4562 instructions mark the special depreciation line “Not allowed for Georgia purposes.” If a cost segregation study gave you a large federal bonus deduction, Georgia made you depreciate those assets more slowly, so your Georgia adjusted basis is higher than your federal basis. On a sale, the Georgia gain is then smaller than the federal gain. Ask your preparer for the separate Georgia depreciation schedule before the closing statement is final.

Section 179 expensing works differently. Georgia allows it with its own limits, which for 2025 were a $2,500,000 deduction cap and a $4,000,000 phase-out threshold, and it does not allow Section 179 on certain real property.

Georgia withholding when a nonresident sells

When a nonresident sells Georgia real property, the buyer must withhold 3% of the purchase price under O.C.G.A. 48-7-128 and send it to the Department of Revenue. If the seller signs a sworn gain affidavit (Form IT-AFF2), the buyer withholds 3% of the gain instead, which is usually far less. The withholding is a prepayment, not the final tax; the seller files a Georgia nonresident return and settles up.

Under the DOR rule, no withholding is due when the price is under $20,000, or when the price is higher but the tax liability shown on IT-AFF2 is under $600. Form IT-AFF3 lists the other exemptions, including a principal residence, a foreclosure, a seller covered by a composite return, a seller that has made the entity-level tax election, and a like-kind exchange where the income is not subject to federal or state income tax. The buyer remits on Form G2-RP by the last day of the month after the month of closing.

Some nonresidents can avoid withholding by being treated as residents. Form IT-AFF1 covers a seller who has filed Georgia returns for the past two years, runs an established Georgia business or owns other Georgia real property worth at least the withholding, will report the sale on a timely Georgia return and, if a corporation or limited partnership, is registered to do business in Georgia.

• Standard withholding: 3% of the purchase price.
• With a gain affidavit (IT-AFF2): 3% of the gain required to be recognized.
• None: price under $20,000, or liability under $600 with IT-AFF2.
• None: an exemption on IT-AFF3, such as a qualifying like-kind exchange.

Worked example: selling a $2 million apartment building in Georgia

A married couple living in Cobb County sells a 22-unit building in Marietta in 2026 for $2,000,000. Commissions and other selling costs are $90,000. They paid $1,150,000 and have taken $400,000 of straight-line depreciation, so the adjusted basis is $750,000 and the gain is $1,160,000. Their other taxable income is $500,000, which already puts them in the 32% federal bracket.

Federal tax: the $400,000 of depreciation is unrecaptured Section 1250 gain at 25%, or $100,000. The remaining $760,000 lands above the $613,700 threshold, so it is taxed at 20%, or $152,000. The 3.8% net investment income tax on the whole gain adds $44,080. Federal tax is $296,080.

Georgia tax: $1,160,000 at 4.99% is $57,884. The combined bill is $353,964, about 18.5% of the $1,910,000 the couple receives after selling costs. At the old 5.19% rate the Georgia share would have been $60,204, so HB 463 saves them $2,320 on this sale.

Now suppose the same couple had moved to Florida before the sale. Georgia still taxes the gain, because the building is in Georgia. The buyer would withhold $60,000 (3% of the price), or $34,800 (3% of the gain) if they signed IT-AFF2. Either way they file a Georgia nonresident return and pay the $57,884 less the amount withheld. The capital gains tax calculator runs the federal side with your own numbers.

How a 1031 exchange changes Georgia tax

A 1031 exchange defers Georgia tax along with federal tax, because Georgia starts from federal adjusted gross income and follows Section 1031. In the example, a full exchange into a replacement worth at least $1,910,000, with all the net cash reinvested and the debt replaced, would push the whole $353,964 into the future.

Georgia has no clawback rule. If you trade an Atlanta building for one in Tennessee or Florida, Georgia does not make you file a tracking form each year the way Oregon does. Cash or debt relief you keep is boot, taxed at 4.99% by Georgia and at the federal rates above. For a nonresident, the like-kind exemption on IT-AFF3 or a gain affidavit showing only the boot keeps withholding in line with the gain actually recognized. Our guide to the 1031 exchange in Georgia covers the state details, and the 1031 exchange rules page covers the 45-day and 180-day deadlines.

Other Georgia costs when you sell

Georgia charges a real estate transfer tax on the deed of $1.00 for the first $1,000 of value and 10 cents for each additional $100, under O.C.G.A. 48-6-1. On a $2,000,000 sale with no liens left in place, that is $2,000. Liens that existed before the sale and stay on the property are excluded from the value.

Pass-through entities have their own rules. A partnership or S corporation can elect to pay Georgia tax at the entity level, and a seller that has made that election is exempt from withholding under IT-AFF3. Ask your CPA whether the election helps before the year of sale ends.

Selling a Georgia apartment building to Skyline

Skyline buys apartment buildings with five or more units in Georgia, from metro Atlanta to Savannah, Augusta, Macon and Columbus. We buy directly, close on your timeline, and can work inside 1031 deadlines. A firm closing date helps your CPA pick the tax year and lets you line up an exchange or the paperwork for nonresident withholding well before closing.