Nebraska Capital Gains Tax on Real Estate

By Skyline Capital Investments · Updated October 26, 2026 · 7 min read

Does Nebraska have a capital gains tax?

Nebraska capital gains tax is part of the state income tax: gains are added to your other income and taxed at the regular rates, which run from 2.46% to 4.55% for 2026. Nebraska’s one special capital gains election, on Form 4797N, applies only to stock in a qualified corporation that an employee received through work. It does not cover real estate.

For an apartment sale large enough to matter, nearly all of the gain is taxed at the top rate. In 2026 that is 4.55%, under the rate schedule in Nebraska Revised Statutes 77-2715.03.

Nebraska income tax brackets for 2026

For 2026 Nebraska has, in effect, three rates, because the statute sets both of its upper brackets at 4.55%. The thresholds below come from the Department of Revenue’s 2026 estimated tax rate schedules on Form 1040N-ES.

• Head of household: 2.46% to $7,700, 3.51% to $39,620 and 4.55% above.
• The brackets are indexed for inflation each year, rounded to the nearest $10.
• The top rate was 5.20% for 2025 and drops to 3.99% for tax years beginning in 2027.

Should you wait until 2027 to sell?

The rate cut is real but modest. Moving from 4.55% to 3.99% saves 0.56% of the gain, or $5,600 for every $1,000,000 of gain. On the $1,253,360 gain in our example below, closing in January 2027 instead of December 2026 would save about $7,019 in Nebraska tax.

Weigh that against what a few months of delay costs you: another round of property tax, the risk that a buyer walks, and whatever happens to interest rates and cap rates in the meantime. If you are already near a year-end closing, ask the buyer whether an early-January date works. If not, the federal tax, which is many times larger, should drive the decision.

How Nebraska and federal capital gains tax combine

You pay both. Federally, long-term capital gain is taxed at 0%, 15% or 20%, and Revenue Procedure 2025-32 sets the 2026 start of the 20% rate at $613,700 of taxable income on a joint return and $545,500 for a single filer. Gain equal to depreciation you claimed is unrecaptured Section 1250 gain, taxed at ordinary rates up to 25%.

The 3.8% net investment income tax applies once modified adjusted gross income passes $250,000 on a joint return or $200,000 for a single filer. Add Nebraska’s 4.55%, and a high-income seller’s combined rate is about 28.4% on the capital gain portion and up to about 33.4% on the depreciation portion.

Nebraska’s return starts from federal adjusted gross income, so the gain flows straight from your federal return to Form 1040N.

Do nonresidents pay Nebraska tax on a property sale?

Yes. A nonresident with income derived from Nebraska sources must file Form 1040N with Schedule III, and Schedule III counts gain or loss from Nebraska sources as Nebraska income. Gain on an apartment building in Omaha or Lincoln is Nebraska-source income even if you live in Iowa, Kansas or Arizona.

Nebraska figures a nonresident’s tax in two steps. You compute Nebraska tax as if all your income were Nebraska income, then multiply it by the ratio of your Nebraska adjusted gross income to your total income. A large Nebraska gain pushes that ratio up, so most of your Nebraska liability will come from the sale. We did not find a rule on the department’s pages requiring withholding from a nonresident’s sale proceeds at closing, so plan to pay through estimated tax or with your return.

Selling through an LLC or partnership in Nebraska

Most Nebraska apartment buildings are held in an LLC taxed as a partnership, and the gain passes through to the members, who report it on their own Nebraska returns. Out-of-state members file Form 1040N with Schedule III for the year of the sale.

Nebraska also lets pass-through entities elect to pay the state tax at the entity level, the pass-through entity tax, or PTET. Under LB 647 (2025), the Department of Revenue says the election can be made on the entity’s income tax return, by its due date including extensions, for tax years beginning in 2023 or later, and members get a credit for the entity-level tax. Because a tax paid by the entity can be deductible on the federal return, where an individual’s state tax deduction is capped, the election is worth asking your CPA about in the year of a large sale.

Short-term and long-term gains in Nebraska

Nebraska taxes both the same way. A building sold after 11 months and one sold after 11 years both have their gain taxed at Nebraska’s regular rates, with no holding-period break at the state level.

The holding period still matters a great deal federally. Gain on property held a year or less is short-term and taxed at ordinary federal rates up to 37%, while long-term gain gets the 15% and 20% rates. If you are close to the one-year mark on a recent purchase, waiting a few weeks can save far more federal tax than any Nebraska planning.

The Nebraska documentary stamp tax on a sale

Nebraska also charges a documentary stamp tax when the deed is recorded, and the seller pays it. Nebraska Revised Statutes 76-901 puts the tax on the grantor executing the deed, per $1,000 of value. LB 78 (2025) raised the rate from $2.25 to $2.32 per $1,000, and LB 1067 (2026) raised it to $3.32 per $1,000 from July 18, 2026. The current statute sets $3.32 for transfers before January 1, 2032 and $2.32 after that.

On a $2,000,000 sale, the stamp tax at $3.32 per $1,000 is $6,640. It is a selling cost, so it lowers your gain for income tax purposes.

Depreciation recapture in Nebraska

Nebraska has no separate recapture rate. Because Nebraska starts from federal AGI and taxes all of it at the regular rates, the part of your gain that represents depreciation is taxed at the same 4.55% as the rest. The category matters on your federal return, where unrecaptured Section 1250 gain can be taxed at up to 25% and Section 1245 recapture at ordinary rates.

If you did a cost segregation study, the personal property pieces produce Section 1245 recapture federally, and Nebraska taxes that gain at 4.55% like everything else. Bring your federal depreciation schedule to whoever prepares the Nebraska return, along with any record of state-only basis adjustments from prior years.

Worked example: selling a $2M apartment building in Nebraska

Nebraska tax uses the 2026 top rate.

A married couple filing jointly sells an 18-unit building in Omaha for $2,000,000 in late 2026. Selling costs are $90,000 plus the $6,640 documentary stamp tax, $96,640 in all. They bought it for $950,000 and have taken $300,000 of straight-line depreciation, for an adjusted basis of $650,000. The gain is $1,253,360: $300,000 of unrecaptured Section 1250 gain and $953,360 of long-term capital gain. They have $200,000 of other taxable income, MAGI already above $250,000 and an $800,000 loan.

Federal tax: the Section 1250 gain stacks on the $200,000 of income. $11,400 falls in the 22% bracket ($2,508), $192,150 in the 24% bracket ($46,116) and $96,450 at the 25% maximum ($24,113), for $72,737. The capital gain starts at $500,000, so $113,700 is taxed at 15% ($17,055) and $839,660 at 20% ($167,932). The 3.8% NIIT on the full gain is $47,628. Federal total: $305,351.

Nebraska tax: 4.55% of $1,253,360 is about $57,028, since their other income already reaches the top bracket. The combined bill is about $362,379, or 28.9% of the gain. After the loan payoff they net $1,103,360 before tax and about $740,981 after.

How a 1031 exchange changes the Nebraska tax

A 1031 exchange defers Nebraska tax along with federal tax. Nebraska’s Revenue Act refers to the Internal Revenue Code as amended, and its return starts from federal AGI, so gain you defer federally never reaches your Nebraska return. In the example, buying a replacement worth at least $1,903,360 and reinvesting all $1,103,360 of net cash would defer the full $362,379.

Nebraska has no clawback rule like those in California, Massachusetts, Montana and Oregon, so you can exchange into another state without annual Nebraska filings. Cash or debt relief you keep is boot, taxed at Nebraska’s regular rates in the year of sale. Our page on the 1031 exchange in Nebraska covers paths, intermediaries and a worked example, and the 1031 exchange calculator handles the federal side.

Ways Nebraska sellers lower the tax

Nebraska gives real estate sellers no exclusion, so the planning is about timing and deferral.

• Use a 1031 exchange to defer federal and Nebraska tax.
• Consider a January 2027 closing, when the top rate falls to 3.99%.
• Use an installment sale to spread gain into 2027 and later years at the lower rate.
• Track every selling cost, including the stamp tax, and every capital improvement in your basis.

Selling a Nebraska apartment building

Skyline buys apartment buildings with five or more units in Nebraska, in Omaha, Lincoln, Bellevue, Grand Island and Kearney. We buy directly, close on your timeline, and can work inside 1031 deadlines. If a January closing saves you tax, we can talk about the date.

For the property tax a buyer underwrites, see the property tax rate in Nebraska, and for the tenant rules that come with the building, Nebraska landlord-tenant law for apartment owners.