Georgia follows federal 1031 exchange rules with a 3% withholding requirement for non-residents, though an exemption is available for 1031 exchanges using form ITAFF3.
This information is for educational purposes only and is not legal or tax advice. Consult with qualified professionals regarding your specific situation.
Important regulations and tax implications for your exchange
5.75%
Yes
3% of sales price
$1 per $1,000 of consideration
Varies by county
• Federal Form 8824 • Georgia Form ITAFF3 (for non-residents claiming exemption from withholding) • Complete closing statements for both properties • Qualified Intermediary agreement
None
Informational step-by-step guide for your 1031 exchange
You must identify potential replacement properties within 45 days of selling your relinquished property. In Georgia, consider regional market differences, urban versus rural locations, and growth corridors when identifying properties.
Work with a qualified intermediary to handle the exchange funds and documentation. Georgia has numerous experienced QIs who understand the local market and can help navigate the state's unique considerations.
Complete the purchase of your replacement property within 180 days of selling your relinquished property. Be aware of Georgia's transfer tax, which will apply to the transaction.
Report your 1031 exchange on your federal tax return using Form 8824 and on your Georgia state tax return. If you're a non-resident, ensure you've filed form ITAFF3 to claim exemption from the 3% withholding requirement.
If you're a non-resident selling investment property in Georgia as part of a 1031 exchange, you must file form ITAFF3 (Seller's Certificate of Exemption) at closing to avoid the 3% withholding requirement. Work with your settlement agent in advance to ensure this form is properly completed and submitted.
Georgia's 159 counties can have significantly different real estate markets, tax rates, and regulations. Research county-specific intangible tax rates, zoning regulations, and growth patterns when selecting replacement properties.
Georgia has several defined growth corridors, particularly around Atlanta (GA-400, I-85, I-75) and other major cities. Properties in these corridors often experience stronger appreciation but may come with higher entry costs. Consider these growth patterns when selecting replacement properties for long-term appreciation potential.
Recent changes and upcoming regulations affecting 1031 exchanges
While there were no significant changes to Section 1031 of the Tax Code in 2024, 2025 may bring new proposals that could potentially affect 1031 Exchanges. Investors should stay informed about potential legislative changes.
The IRS has issued tax relief for residents and business owners in Georgia affected by hurricanes, extending Section 1031 exchange deadline requirements until September 24, 2024.
This bill proposes mandatory reappraisal of property parcels and provides requirements for property tax assessments, potentially affecting property valuations relevant to 1031 exchanges.
Plan and track your critical exchange deadlines
Enter the closing date of your relinquished property to calculate your 1031 exchange deadlines:
Detailed analysis of key real estate markets in your area
Different regions within this state offer unique opportunities and challenges for 1031 exchanges. Here's an overview of key regional markets and their characteristics.
Atlanta offers a diverse economy centered around transportation, technology, film, and corporate headquarters, with strong population growth and development activity.
Savannah offers a tourism and port-driven market with growing film industry, strong historic appeal, and diverse development activity.
Athens offers a university and healthcare-driven market with growing cultural scene, relatively affordable housing, and stable employment base.
Augusta offers a military and healthcare-driven market with growing cybersecurity sector, affordable housing, and stable employment base.
Columbus offers a military and manufacturing-driven market with affordable housing, stable employment base, and growing downtown revitalization.
Investment property insights for Georgia
Multifamily properties in Georgia offer attractive returns compared to many other states, with particularly strong performance in Atlanta, Savannah, and Athens.
Office properties in Georgia present a mixed picture, with strong performance in certain submarkets and property types, particularly medical office and suburban Class A space.
Retail properties in Georgia have shown resilience compared to national trends, with neighborhood centers and well-located strip centers performing particularly well.
Industrial properties in Georgia offer strong returns, particularly along major transportation corridors and near the Port of Savannah.
Local tax benefits and programs for property investors
Beyond the tax deferral benefits of a 1031 exchange, this state offers additional tax incentives that can further enhance your investment returns. Review these programs to see if your replacement property might qualify. Please contact a tax professional prior to electing any tax incentive to determine if there are any additional tax concerns or benefits available to you.
Tax credit for the rehabilitation of historic structures, which can be combined with federal historic tax credits for significant tax benefits.
25% of qualified rehabilitation expenses up to $100,000 for personal residences; 25% up to $5 million for income-producing properties
One-time credit
Submit application to Historic Preservation Division, receive approval, and complete rehabilitation according to approved plans
Tax credit for businesses in certain industries that create new jobs, potentially benefiting commercial property owners through increased tenant demand and property values.
$750 to $4,000 per job created (varies by county tier)
5 years
Submit application to Georgia Department of Community Affairs, receive approval, and meet ongoing reporting requirements
Federal tax incentive program for investments in designated low-income communities, which can be combined with 1031 exchanges for certain investors.
Deferral of capital gains, reduction of tax on deferred gains, and potential elimination of tax on appreciation
Varies based on holding period
Invest through Qualified Opportunity Fund within 180 days of realizing capital gain
Real 1031 exchange examples from Georgia
Current market conditions and future forecasts
Strong growth with 10% projected price increase in 2025.
Moderate to strong growth with 3% projected price increase by August 2025.
Moderate growth with 3% projected price increase by August 2025.
Moderate growth with emphasis on areas near Fort Eisenhower.
Long-term appreciation analysis in Georgia
Understanding historical property appreciation patterns can help you identify areas with strong long-term growth potential for your 1031 exchange replacement property.
8.7%
112.3%
156.8%
Strong continued growth expected, particularly in suburban areas
7.9%
98.6%
142.5%
Moderate to strong growth expected, with 3% projected price increase by August 2025
7.2%
87.4%
128.9%
Moderate growth expected, with 3% projected price increase by August 2025
6.8%
76.5%
115.7%
Moderate growth expected, particularly in areas near Fort Eisenhower
6.5%
72.8%
108.3%
Moderate growth expected, particularly in areas near Fort Moore
5.9%
65.4%
96.7%
Moderate growth expected, with revitalization efforts supporting appreciation
Current rental trends and opportunities in Georgia
Understanding the rental market is crucial when selecting investment properties for your 1031 exchange. This analysis provides insights into current rental conditions across the state.
| Property Type | Avg. Rent | Vacancy Rate | Rent Trend | Cap Rate |
|---|---|---|---|---|
| Luxury Apartments | $1,800 - $2,500 (1BR) | 5.8% | up | 5.0% - 5.8% |
| Class B Apartments | $1,400 - $1,800 (1BR) | 5.2% | up | 5.8% - 6.5% |
| Single Family Homes | $1,800 - $3,000 (3BR) | 4.5% | up | 5.5% - 6.2% |
Atlanta's rental market includes a diverse mix of young professionals, students, and families. Approximately 42% of renters are under 35 years old. The market has seen an increase in remote workers from the Northeast and West Coast seeking Georgia's lifestyle and tax advantages.
Atlanta has minimal rental regulations beyond state requirements. The regulatory environment is generally landlord-friendly, with few restrictions on rental operations. Short-term rental regulations vary by municipality, with some areas imposing restrictions while others remain permissive.
Atlanta's rental market is expected to remain strong with continued growth, particularly in suburban areas and along the BeltLine. The combination of job growth, population migration, and limited new supply continues to drive rental demand.
| Property Type | Avg. Rent | Vacancy Rate | Rent Trend | Cap Rate |
|---|---|---|---|---|
| Historic District Apartments | $1,600 - $2,200 (1BR) | 4.2% | up | 5.2% - 6.0% |
| Suburban Apartments | $1,200 - $1,600 (1BR) | 5.5% | up | 6.0% - 6.8% |
| Vacation Rentals | $200 - $400+ (nightly in season) | 35% (annual average) | up | 5.5% - 6.5% |
Savannah's rental market includes a mix of young professionals, students from SCAD and other institutions, military personnel, and seasonal visitors. The market has a significant seasonal component due to tourism.
Savannah has specific regulations for historic district properties, including restrictions on exterior modifications. Short-term rental regulations are more stringent in the historic district, with permits required and some areas restricted.
Savannah's rental market is projected to see moderate to strong growth, particularly in the historic district and areas near SCAD. The combination of tourism, education, port expansion, and limited supply in the historic district continues to drive rental demand.
| Property Type | Avg. Rent | Vacancy Rate | Rent Trend | Cap Rate |
|---|---|---|---|---|
| Student Housing | $700 - $1,200 (per bedroom) | 4.0% | up | 5.5% - 6.2% |
| Conventional Apartments | $1,100 - $1,500 (1BR) | 5.8% | up | 6.0% - 6.8% |
| Single Family Homes | $1,500 - $2,200 (3BR) | 4.8% | up | 5.8% - 6.5% |
Athens' rental market is heavily influenced by the University of Georgia, with a large student population. The market also includes young professionals, healthcare workers, and families.
Athens has minimal rental regulations beyond state requirements. The regulatory environment is generally landlord-friendly, with some specific considerations for student housing.
Athens' rental market is expected to see moderate growth, with 3% projected price increases by August 2025. The combination of university enrollment, healthcare sector growth, and limited new supply continues to drive rental demand.
Key mistakes to avoid in your 1031 exchange
Non-resident sellers of Georgia property must file form ITAFF3 at closing to claim exemption from the 3% withholding requirement for 1031 exchanges.
Work with your qualified intermediary and settlement agent well in advance of closing to ensure the proper exemption form is completed and submitted. Confirm that your settlement agent is familiar with 1031 exchanges and the withholding exemption process.
Georgia has 159 counties, each with its own regulations, zoning requirements, and tax structures that can significantly impact investment properties.
Research county-specific regulations, zoning requirements, and tax structures during your due diligence period. Consider consulting with a local real estate attorney familiar with the specific county where your replacement property is located.
Some Georgia markets, particularly in tourist areas like Savannah and the Golden Isles, have significant seasonal fluctuations in occupancy and rental rates.
Research seasonal patterns in your target market and factor these fluctuations into your financial projections. Consider properties with a mix of short-term and long-term rental potential to smooth out seasonal variations.
Properties in historic districts, particularly in Savannah and parts of Atlanta, have specific regulations regarding renovations and modifications.
Research historic district regulations and consult with a local architect or contractor experienced in historic properties before identifying such properties for your exchange. Factor in potential additional costs and limitations for renovations and modifications.
Common questions about Georgia 1031 exchanges
Yes, Georgia fully conforms to federal 1031 exchange rules. If the Section 1031 exchange is valid at the federal level, it is valid at the state level, and Georgia never gets to tax the gain deferred under federal law.
Georgia requires 3% withholding on sales of real property by non-residents. However, an exemption is available for 1031 exchanges by filing form ITAFF3 (Seller's Certificate of Exemption) at closing.
Georgia imposes a state income tax on capital gains at a rate of 5.75%, which can be deferred through a 1031 exchange.
Yes, properties in historic districts, particularly in Savannah and parts of Atlanta, have specific regulations regarding renovations and modifications. These regulations can impact your ability to make changes to the property and may require additional approvals and permits.