1031 Exchange in New Hampshire
New Hampshire has no personal income tax on wages or capital gains, and its last remaining income tax — the Interest & Dividends Tax — was fully repealed effective January 1, 2025. Because the state does not tax an individual's capital gains at all, a 1031 exchange of New Hampshire property held by an individual defers only federal tax; there is no separate New Hampshire income tax to defer and no clawback. Business entities subject to the state's Business Profits Tax follow federal Section 1031 treatment. New Hampshire does levy a Real Estate Transfer Tax under RSA 78-B.
Fast Facts
- State Income Tax on Capital Gains
- None. New Hampshire has no personal income tax on wages or capital gains. The Interest & Dividends Tax — its last income tax — was repealed effective January 1, 2025.
- Conforms to Federal 1031
- For individuals the question is moot — there is no personal income tax to defer. Business entities under the Business Profits Tax follow IRC Section 1031 (RSA 77-A:4-b).
- Clawback Rule
- None. New Hampshire does not tax individual capital gains, so there is no deferred state income tax to recapture on a later or out-of-state disposition.
- Non-Resident Withholding
- New Hampshire imposes no personal income tax, so there is no state income-tax withholding on a nonresident's gain from selling New Hampshire real estate.
- Transfer Tax & Sales Tax
- No general sales tax. A Real Estate Transfer Tax applies under RSA 78-B at $0.75 per $100 of consideration on each of the buyer and seller ($1.50 combined), with a $20 minimum each.
Why New Hampshire Is Different: No Income Tax to Defer
Most state 1031 pages walk through how the state’s income tax interacts with the federal deferral. New Hampshire is a genuine outlier: for an individual investor, there is no state income tax on capital gains to defer in the first place.
New Hampshire has never taxed wages, and for years its only broad personal levy on investment income was the Interest & Dividends (I&D) Tax. That tax was phased down — to 4% for periods ending on or after December 31, 2023, and 3% for periods ending on or after December 31, 2024 — and then fully repealed effective January 1, 2025. Critically, the I&D Tax applied to interest and dividend income, not to capital gains from selling real estate; New Hampshire has no capital gains tax on individuals.
The practical consequence for a New Hampshire investor doing a 1031 exchange is straightforward. When you sell an investment property held in your own name and reinvest through a Qualified Intermediary, the exchange defers your federal capital-gains tax and depreciation recapture. There is no parallel New Hampshire income tax bill to worry about — deferred or otherwise. And because the state never taxed the gain, there is nothing to claw back later, even if you exchange into replacement property in another state. This is the opposite of high-tax states with clawback statutes, where the state keeps a running tab on deferred gain.
One nuance matters for entities: New Hampshire’s Business Profits Tax (BPT) under RSA 77-A does reach business income, and it uses federal taxable income as its starting point. New Hampshire law includes a specific rule for like-kind exchanges under IRC Section 1031 (RSA 77-A:4-b), so a business organization subject to the BPT generally carries the federal like-kind basis and follows federal Section 1031 treatment. Investors who hold real estate through a business that files a BPT return should confirm their situation with a New Hampshire tax professional.
Legal and Tax Considerations
State Income Tax on Capital Gains
None. No personal income tax on wages or capital gains. Interest & Dividends Tax repealed effective January 1, 2025.
Conforms to Federal 1031
Moot for individuals (no income tax). Business Profits Tax entities follow IRC Section 1031 via RSA 77-A:4-b.
Clawback
None. No deferred state income tax exists to recapture on an out-of-state or later disposition.
Real Estate Transfer Tax
RSA 78-B: $0.75 per $100 on each of buyer and seller ($1.50 combined), $20 minimum each. Not waived by a 1031 exchange.
Required Documentation
- Federal Form 8824 (Like-Kind Exchanges)
- Qualified Intermediary exchange agreement and assignment documents
- Complete closing/settlement statements for both the relinquished and replacement properties
- New Hampshire Real Estate Transfer Tax declaration (Forms CD-57-S / CD-57-P) filed with the register of deeds
- If applicable, Business Profits Tax records tracking the federal like-kind basis of business real estate
Clawback Rule
None
Official References
- NH DRA — Repeal of NH Interest and Dividends Tax Now in Effect
- NH DRA — Interest & Dividends Tax (Taxes at a Glance)
- NH DRA — Real Estate Transfer Tax (Taxes at a Glance)
- RSA 78-B:1 — Transfer Tax
- RSA 77-A:4-b — Special Rule for Like-Kind Exchanges Under IRC Section 1031
- IRS Form 8824 — Like-Kind Exchanges
New Hampshire Transfer Tax and Sales Tax Context
Even though New Hampshire imposes no income tax on capital gains, a real estate deal is not friction-free. New Hampshire levies a Real Estate Transfer Tax (RETT) under RSA 78-B on the sale, granting, and transfer of real estate. The rate is $0.75 per $100 of the price or consideration, imposed on both the buyer and the seller — so the combined burden is effectively $1.50 per $100 of value, split between the two parties, with a minimum tax of $20 each where the consideration is $4,000 or less. The tax is generally paid to the county register of deeds and evidenced by stamps affixed to the deed when it is recorded.
Because a 1031 exchange is a federal income-tax deferral mechanism, it does not by itself exempt a conveyance from the New Hampshire transfer tax. RSA 78-B contains its own list of statutory exceptions (RSA 78-B:2), and whether any exception applies to a particular exchange leg is a fact-specific question for New Hampshire counsel or the register of deeds — do not assume a 1031 exchange automatically avoids the RETT.
On the consumption side, New Hampshire is one of the handful of states with no general sales tax, which the Department of Revenue Administration confirms directly. (The state does impose a Meals & Rentals Tax on prepared food and short-term lodging, but that is not a general sales tax and does not touch a real estate exchange.) The net picture for a New Hampshire real estate investor: no income tax on the gain, no sales tax, but a real transfer tax at closing that you should budget for on both the relinquished and replacement sides of an in-state exchange.
Step-by-Step Process
- 1
Engage a Qualified Intermediary Before Closing
For a delayed exchange, set up a Qualified Intermediary (QI) before you close on the relinquished property. You cannot take actual or constructive receipt of the sale proceeds — the QI holds the funds and later uses them to acquire your replacement property.
- 2
Sell the Relinquished Property
Close the sale with the QI receiving the proceeds. Report the disposition on federal Form 8824. Budget for the New Hampshire Real Estate Transfer Tax due at recording under RSA 78-B, which a 1031 exchange does not automatically waive.
- 3
Identify Replacement Property Within 45 Days
You have 45 calendar days from the sale of the relinquished property to identify potential replacement property in writing, following the federal identification rules (such as the three-property rule or the 200% rule).
- 4
Close on Replacement Property Within 180 Days
You must acquire the replacement property within 180 calendar days of the sale (or your federal tax-return due date including extensions, if earlier). Only real property held for investment or business use qualifies under post-2017 federal law.
- 5
File Federal Reporting
Report the exchange on federal Form 8824 with your federal return. New Hampshire has no personal income tax return for individual capital gains, so there is no separate state income-tax filing for the deferral. Business entities filing a Business Profits Tax return should track the federal like-kind basis under RSA 77-A:4-b.
Timeline Calculator
Enter the closing date of your relinquished property to calculate your 1031 exchange deadlines:
Frequently Asked Questions
No. New Hampshire has no personal income tax on wages or capital gains. Its last income tax — the Interest & Dividends Tax — was fully repealed effective January 1, 2025, and that tax applied to interest and dividends, not to capital gains. For an individual investor, a 1031 exchange of New Hampshire property defers only your federal capital-gains tax and depreciation recapture; there is no separate New Hampshire income tax to defer.
No. Clawback rules exist in some states to recapture deferred state income tax when property is exchanged out of state. Because New Hampshire does not tax individual capital gains at all, there is no deferred state income tax to recapture, so there is nothing to claw back — even if you exchange New Hampshire property into replacement property in another state.
Generally yes. New Hampshire imposes a Real Estate Transfer Tax under RSA 78-B at $0.75 per $100 of consideration on each of the buyer and seller (about $1.50 per $100 combined), with a $20 minimum each. A 1031 exchange is a federal income-tax deferral and does not by itself exempt a conveyance from the transfer tax. RSA 78-B has its own statutory exceptions, so confirm your specific situation with New Hampshire counsel or the county register of deeds.
New Hampshire has no personal income tax, so there is no state income-tax withholding on a nonresident seller's gain from New Hampshire real estate. You may still owe the Real Estate Transfer Tax at closing, and you should address any withholding rules in the state where you live or where replacement property is located.
New Hampshire's Business Profits Tax (RSA 77-A) reaches business income and starts from federal taxable income. New Hampshire law includes a specific like-kind exchange rule (RSA 77-A:4-b) tied to IRC Section 1031, so a business organization subject to the Business Profits Tax generally follows federal Section 1031 treatment and carries the federal like-kind basis. If you hold real estate through an entity that files a Business Profits Tax return, confirm the details with a New Hampshire tax professional.
Related Guides
- What Is a 1031 Exchange? — the complete federal framework, deadlines, and rules
- 1031 Exchange by State — compare New Hampshire with other states’ rules and clawback provisions
References
Official References
- NH DRA — Repeal of NH Interest and Dividends Tax Now in Effect
- NH DRA — Interest & Dividends Tax (Taxes at a Glance)
- NH DRA — Real Estate Transfer Tax (Taxes at a Glance)
- NH DRA — Does New Hampshire have a sales tax?
- RSA 78-B:1 — Transfer Tax
- RSA 77-A:4-b — Special Rule for Like-Kind Exchanges Under IRC Section 1031
- IRS Form 8824 — Like-Kind Exchanges
This information is for educational purposes only and is not legal or tax advice. Consult with qualified professionals regarding your specific situation.