Does Louisiana have a capital gains tax?
Louisiana has no separate capital gains tax, but it taxes capital gains as part of regular income at a flat 3%. The Louisiana Department of Revenue says that for taxable periods beginning on or after January 1, 2025, the individual income tax rate is a flat 3% and the graduated brackets and rates have been repealed.
Before the change, Louisiana used three brackets that topped out at 4.25% for 2022 through 2024, and at 6% before that. So an owner who sells a building in Baton Rouge or Lafayette today pays the state less than half of what the same sale would have cost in 2021, measured by the top rate.
What Act 11 changed for real estate sellers
Act 11 of the 2024 Third Extraordinary Session rewrote the individual income tax, and the Department of Revenue summarized it in Revenue Information Bulletin 25-012 on March 7, 2025. Three changes matter most when you sell an apartment building.
- One rate for everyone: 3% on all Louisiana taxable income, for single, joint, head-of-household and separate filers, and for estates and trusts.
- A larger standard deduction: $12,500 for single filers and $25,000 for joint filers in 2025, indexed to inflation from 2026. The Department’s 2026 withholding tables use $12,875 and $25,750, and it notes the final amounts may differ slightly.
- The net capital gain deduction in R.S. 47:293(9)(a)(xvii) was repealed, so there is no special Louisiana break for long-term gains.
- The older deduction for gain from selling a Louisiana business held at least five years now applies only to installment and perfected sales before January 1, 2025, according to the 2025 nonresident return instructions. It never covered an ordinary rental building in any case.
Louisiana capital gains tax rate for 2026
The rate for 2026 is 3%, and it applies to every dollar of Louisiana taxable income. There is no bracket to climb: a $50,000 gain and a $5 million gain are taxed at the same rate.
That simplicity makes Louisiana estimates easy. Multiply the taxable gain by 3% and you have the state tax, before any credits. The rest of the planning on a large sale is federal.
| Tax years | Louisiana rate structure | Top rate |
|---|---|---|
| 2009 to 2021 | Three brackets: 2%, 4%, 6% | 6% |
| 2022 to 2024 | Three brackets: 1.85%, 3.5%, 4.25% | 4.25% |
| 2025 and later | Flat rate on all taxable income | 3% |
How Louisiana treats depreciation recapture
Louisiana taxes depreciation recapture at the same 3% as the rest of the gain. The Louisiana return starts from federal adjusted gross income, and the flat rate applies to the whole amount, so the federal labels on the gain do not change the state bill.
Federally, the labels matter a great deal. Straight-line depreciation on the building comes back as unrecaptured Section 1250 gain, taxed at up to 25%. Depreciation on personal property, such as appliances and flooring broken out in a cost segregation study, is Section 1245 recapture, taxed at ordinary rates up to 37%. Appreciation above your original cost gets the 0%, 15% or 20% long-term rates. Louisiana takes 3% of all three.
How Louisiana tax stacks on federal tax
Louisiana tax is added on top of federal tax; there is no offset between them. For 2026, IRS Revenue Procedure 2025-32 sets the 20% long-term rate above $613,700 of taxable income for married couples filing jointly and above $545,500 for single filers. The 0% rate runs to $98,900 joint and $49,450 single, with 15% in between.
The 3.8% net investment income tax applies on top of that once modified adjusted gross income passes $250,000 joint or $200,000 single. On a large Louisiana sale, the combined top rate on appreciation is 20% plus 3.8% federal plus 3% state, or 26.8%.
| Part of the gain | Federal rate (2026) | Louisiana rate |
|---|---|---|
| Appreciation above original cost (held over a year) | 0%, 15% or 20% | 3% |
| Straight-line depreciation (unrecaptured 1250 gain) | Up to 25% | 3% |
| Section 1245 recapture on personal property | Ordinary rates up to 37% | 3% |
| Net investment income tax | 3.8% above the MAGI thresholds | None |
Nonresidents selling Louisiana property
Nonresidents owe Louisiana tax on gains sourced to Louisiana, which includes gain on a building located in the state. On the 2025 nonresident return, Form IT-540B, you list your federal gains and then enter the part sourced in Louisiana; the 3% rate is applied to Louisiana income figured from that worksheet.
Ask your title company early whether any state paperwork applies at closing, especially if you or your entity are based outside Louisiana. If the seller is a foreign person, federal FIRPTA withholding can apply regardless of state rules.
Worked example: selling a $2 million apartment building in Louisiana
A married couple sells a 20-unit building in New Orleans for $2,000,000 in 2026. Selling costs are $80,000, so the amount realized is $1,920,000. They paid $900,000 and have taken $330,000 of depreciation: $270,000 straight-line on the building and $60,000 on personal property. Adjusted basis is $570,000 and the gain is $1,350,000. Their other taxable income is $420,000.
Federal tax: the $60,000 of Section 1245 recapture falls in the 32% bracket, or $19,200. The $270,000 of unrecaptured Section 1250 gain is taxed at 25%, or $67,500. The remaining $1,020,000 sits above the $613,700 threshold and is taxed at 20%, or $204,000. The 3.8% net investment income tax on the full gain adds $51,300. Federal tax is $342,000.
Louisiana tax: 3% of the $1,350,000 gain is $40,500. Under the 4.25% top rate that applied through 2024, the same gain would have cost up to about $57,375 at the margin, so the flat rate saves this couple roughly $16,875.
Their total bill is about $382,500, close to 19.9% of the amount realized, and about 89% of it is federal. The capital gains tax calculator runs the federal side for your own figures.
| Item | Amount |
|---|---|
| Amount realized | $1,920,000 |
| Total gain | $1,350,000 |
| Federal tax | $342,000 |
| Louisiana tax (3%) | $40,500 |
| Total tax | $382,500 |
How a 1031 exchange changes the Louisiana tax
A 1031 exchange defers the Louisiana tax along with the federal tax, because Louisiana starts from federal adjusted gross income and deferred gain never reaches it. In the example, a full exchange into a replacement worth at least $2,000,000, with all the net cash reinvested, would push the $40,500 of Louisiana tax and the $342,000 of federal tax into the future.
Louisiana does not follow the gain once it leaves the state. It is not one of the four states with a clawback rule, so an owner who exchanges a Shreveport building for one in Texas files no annual tracking form. Any cash or debt relief you keep is boot and is taxed at 3% by Louisiana and at the usual federal rates. Our page on the 1031 exchange in Louisiana covers the state details, and 1031 exchange rules covers the 45-day and 180-day deadlines.
Installment sales and seller financing
An installment sale spreads the gain over the years you collect principal, and Louisiana taxes each year’s share at 3% because it follows the federal figure. With one flat rate, spreading the gain does not lower the Louisiana rate the way it can in a state with brackets. The federal benefit can still be real if it keeps more of the gain in the 15% bracket or under the net investment income tax threshold.
Interest the buyer pays you on the note is ordinary income, taxed at 3% in Louisiana. Section 1245 recapture is reported in full in the year of sale no matter how the payments are spread, so the first year carries more tax than the payment schedule suggests.
Planning points for a Louisiana sale
With a flat 3% rate, Louisiana planning is mostly about timing and federal choices.
- Get a depreciation and recapture schedule from your preparer before you set the price allocation; it drives the federal bill even though Louisiana taxes every part at 3%.
- Hold the building more than a year so the gain is long-term federally.
- If you are 65 or older, ask whether the $12,000 per-person retirement income exemption affects your other income in the sale year.
- Compare a full sale, a 1031 exchange and an installment sale on federal tax first; the Louisiana piece will be about 3% of the gain in each case.
Does ownership structure change the Louisiana rate?
Very little. The 3% rate applies to individuals of every filing status, to estates and trusts, and to pass-through entities that elect to be taxed as C corporations for Louisiana purposes, according to Revenue Information Bulletin 25-012. A building held in an LLC taxed as a partnership passes its gain through to the members, who each pay 3% on their share.
Where structure still matters is on the federal side and in who files. A partnership with out-of-state members may file a composite return and pay Louisiana tax on their behalf, and the 2025 nonresident instructions show where a member claims that payment. Talk to your preparer about which route your entity uses before closing, so the proceeds set aside for tax match what the return will show.
Timing matters less than it used to. Before 2025, a sale that pushed income into the top bracket paid 4.25% on the margin, so owners sometimes split sales across tax years. With one rate, the Louisiana bill on a given gain is the same whether you close in December or January, and the decision turns on federal brackets and your own plans.
Selling a Louisiana apartment building to Skyline
Skyline buys apartment buildings with five or more units in Louisiana, from New Orleans and Baton Rouge to Lafayette and Shreveport. We buy directly, close on your timeline, and can work inside 1031 deadlines. A fixed closing date lets your CPA plan the federal side and set up an exchange before the sale.
For the tax a buyer will carry after closing, see property tax rate in Louisiana. For the lease rules that come with the building, see Louisiana landlord-tenant law for apartment owners.
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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