New Hampshire follows federal 1031 exchange rules with no state capital gains tax, offering a significant tax advantage for real estate investors in a market with strong growth in Manchester, Nashua, and Concord.
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
0%
4% (2024), reducing to 3% in future periods
Yes
$0.75 per $100 of value (0.75%)
Follows federal guidelines
Follows federal guidelines
• Federal Form 8824 • New Hampshire Real Estate Transfer Tax Declaration of Consideration Form (CD-57) • Complete closing statements for both properties
None
Informational step-by-step guide for your 1031 exchange
Work with a qualified intermediary to handle the exchange funds and documentation. While New Hampshire does not have state-specific QI requirements, choose a reputable QI with experience in New Hampshire real estate transactions.
Complete the sale of your relinquished property, ensuring all documentation is properly handled by your QI. Be prepared for New Hampshire's Real Estate Transfer Tax (RETT) of 0.75%, typically split between buyer and seller.
Within 45 days of selling your relinquished property, identify potential replacement properties. In New Hampshire, consider local economic factors, seasonal market variations, and regional differences when identifying properties.
Conduct thorough due diligence on your identified replacement properties. In New Hampshire, pay special attention to property tax rates, which vary significantly by municipality, and any seasonal considerations that might affect the property's value or income potential.
Complete the purchase of your replacement property within 180 days of selling your relinquished property. New Hampshire closing processes typically take 30-45 days, with potential seasonal variations.
Report your 1031 exchange on your federal tax return. Since New Hampshire has no state capital gains tax, there is no state tax return filing requirement for the exchange itself.
Be aware of New Hampshire's seasonal real estate market variations. Winter months (December-February) typically see lower inventory and transaction volumes, while spring and summer (April-August) are the most active periods. Plan your exchange timeline accordingly, allowing for potential delays during winter months, especially in northern regions.
Consider the significant differences between southern New Hampshire (Manchester, Nashua), the Seacoast region (Portsmouth, Dover), the Lakes Region, and the White Mountains. These regions have distinct market dynamics, price points, and seasonal patterns. Southern New Hampshire is more influenced by the Boston metro economy, while northern regions are more affected by tourism and second-home markets.
Account for New Hampshire's Real Estate Transfer Tax (RETT) of $0.75 per $100 of value (0.75%), split equally between buyer and seller unless otherwise negotiated. This tax applies to both the relinquished and replacement properties if both are in New Hampshire. Budget for this expense in your exchange calculations.
Recent changes and upcoming regulations affecting 1031 exchanges
New Hampshire maintains its Real Estate Transfer Tax (RETT) at $0.75 per $100 of value (0.75%), split equally between buyer and seller unless otherwise negotiated. This tax applies to property transfers, including those in 1031 exchanges.
New Hampshire's Interest & Dividends Tax was reduced from 5% to 4% for taxable periods ending on or after December 31, 2023, and will further decrease to 3% for future periods, with plans for eventual repeal. This tax does not apply to capital gains from real estate transactions.
New Hampshire maintains regulations for Qualified Intermediaries facilitating 1031 exchanges, requiring them to follow federal guidelines and maintain proper documentation for all exchange transactions.
Plan and track your critical exchange deadlines
Enter the closing date of your relinquished property to calculate your 1031 exchange deadlines:
Investment property insights for New Hampshire
Multifamily properties in New Hampshire offer strong investment potential, particularly in Manchester, Nashua, and Portsmouth, driven by population growth, limited housing supply, and strong rental demand.
Commercial and retail properties in New Hampshire offer stable returns with moderate appreciation potential, particularly in growing urban areas and tourist-oriented locations.
Short-term rental properties in New Hampshire offer strong returns, particularly in the Lakes Region, White Mountains, and Seacoast, driven by tourism and second-home demand.
Industrial properties in New Hampshire show strong performance, particularly in southern regions near major transportation corridors, driven by e-commerce growth and logistics demand.
Real 1031 exchange examples from New Hampshire
Current market conditions and future forecasts
Manchester leads New Hampshire's real estate market, named the hottest housing market in America according to Realtor.com's January 2025 report. The market benefits from migration from Massachusetts, strong job growth, and relative affordability compared to Boston. Nashua shows similar strength, with its proximity to the Massachusetts border attracting commuters seeking tax advantages.
The Seacoast region shows strong growth, with Portsmouth experiencing an 11.2% year-over-year price increase. The market benefits from limited land availability, coastal premium, and strong tourism. Dover and Rochester offer more affordable alternatives while still providing access to the Seacoast lifestyle.
Concord shows strong growth as the state capital, ranked as the 5th hottest housing market in the country. The Lakes Region benefits from growing tourism and second-home demand, with lakefront properties commanding significant premiums. These areas offer a balance of affordability and appreciation potential.
The White Mountains and North Country show more moderate growth compared to southern New Hampshire, but offer exceptional recreational amenities and strong vacation rental potential. The market is supported by tourism, second-home demand, and increasing interest in remote work opportunities.
Long-term appreciation analysis in New Hampshire
Understanding historical property appreciation patterns can help you identify areas with strong long-term growth potential for your 1031 exchange replacement property.
48.6%
92.3%
138.7%
Continued strong appreciation expected, with Manchester named the hottest housing market in America according to Realtor.com's January 2025 report
52.4%
97.8%
145.2%
Strong appreciation projected, with Portsmouth showing an 11.2% increase in median sale prices year-over-year
43.2%
82.7%
124.5%
Moderate to strong appreciation expected, with Concord ranked as the 5th hottest housing market in the country
38.5%
68.9%
96.3%
Moderate appreciation expected, with stronger growth in popular resort areas and towns with high-speed internet access
Current rental trends and opportunities in New Hampshire
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 - $2,200 (1BR) | 3.8% | up | 5.5% - 6.5% |
| Class B Apartments | $1,400 - $1,800 (1BR) | 3.2% | up | 6.5% - 7.5% |
| Single Family Homes | $2,200 - $2,800 (3BR) | 2.8% | up | 6.0% - 7.0% |
Manchester and Nashua's rental market serves a diverse tenant base, including young professionals, families, and commuters to Boston. The market has significant variation by neighborhood, with luxury rentals concentrated in downtown areas and newer developments. Approximately 45% of renters are under 35, and 35% have household incomes above $80,000.
Manchester and Nashua have relatively few rental regulations compared to nearby Massachusetts cities, creating a landlord-friendly environment. Both cities require rental property registration. Eviction processes are relatively straightforward and efficient compared to many states.
The Manchester-Nashua rental market is expected to remain strong due to population growth, job creation, and limited housing supply. New construction is focused on luxury properties in downtown areas and select suburban neighborhoods. Rent growth is projected to continue at a healthy pace, particularly in areas with good access to employment centers and amenities.
| Property Type | Avg. Rent | Vacancy Rate | Rent Trend | Cap Rate |
|---|---|---|---|---|
| Luxury Apartments | $2,000 - $2,500 (1BR) | 4.0% | up | 5.2% - 6.2% |
| Class B Apartments | $1,600 - $2,000 (1BR) | 3.5% | up | 6.2% - 7.2% |
| Single Family Homes | $2,500 - $3,200 (3BR) | 3.0% | up | 5.8% - 6.8% |
The Seacoast rental market serves a mix of young professionals, families, and retirees. Portsmouth attracts higher-income renters, while Dover and Rochester offer more affordable options. The market is influenced by tourism, the University of New Hampshire, and the Portsmouth Naval Shipyard. Approximately 40% of renters are under 35, and 40% have household incomes above $90,000.
Portsmouth has somewhat more rental regulations than other New Hampshire cities, particularly for properties in historic districts. Dover and Rochester have fewer restrictions. All cities require rental property registration. Eviction processes are relatively straightforward and efficient compared to many states.
The Seacoast rental market is expected to remain strong due to limited housing supply, strong local economy, and quality of life factors. New construction is focused on luxury properties in Portsmouth and mixed-income developments in Dover and Rochester. Rent growth is projected to continue at a healthy pace, particularly in Portsmouth and areas with good access to amenities.
| Property Type | Avg. Rent | Vacancy Rate | Rent Trend | Cap Rate |
|---|---|---|---|---|
| Year-Round Rentals | $1,200 - $1,600 (1BR) | 4.5% | up | 6.5% - 8.0% |
| Vacation Rentals | $1,500 - $3,500 per week (seasonal) | 30% annual average (seasonal variation) | up | 7.0% - 9.0% (based on annual income) |
| Single Family Homes | $1,800 - $2,400 (3BR) | 4.0% | up | 6.8% - 8.2% |
The Lakes Region and White Mountains rental market serves a mix of year-round residents, seasonal workers, and vacation renters. The market has significant seasonal variation, with peak demand during summer and winter months. Year-round rentals serve local workers, retirees, and remote workers, while vacation rentals serve tourists and second-home owners.
Rental regulations vary by municipality, with some towns imposing restrictions on short-term rentals. Most areas have relatively landlord-friendly policies for long-term rentals. Seasonal rental agreements often differ from standard leases, with higher security deposits and different payment structures.
The year-round rental market is expected to remain stable with moderate growth, while the vacation rental market shows strong growth potential due to increasing tourism and remote work trends. Limited new construction supports rent stability in existing properties. These markets offer higher initial yields than southern New Hampshire, though with more seasonal variation.
Key mistakes to avoid in your 1031 exchange
New Hampshire's real estate market has significant seasonal variations, with higher transaction volumes in spring and summer compared to winter months.
Plan exchange timelines with seasonal considerations in mind. Allow additional time for due diligence and closing during winter months. Consider scheduling property inspections during favorable weather conditions when possible. Work with local professionals familiar with seasonal market dynamics.
New Hampshire has significant differences between southern regions (Manchester, Nashua), the Seacoast (Portsmouth, Dover), the Lakes Region, and the White Mountains, which can create challenges for investors unfamiliar with these distinct regions.
Thoroughly research local market conditions before acquiring properties in unfamiliar areas. Consider working with property managers who specialize in specific regions. Understand that southern New Hampshire operates almost as an extension of the Boston metro market, while other regions have different demand drivers, appreciation patterns, and management requirements.
New Hampshire has relatively high property taxes, with an average effective rate of about 2.05%, among the highest in the nation. This can significantly impact cash flow projections for investment properties.
Research property tax rates in specific municipalities before completing an exchange. Understand that property tax rates vary significantly by town, with some municipalities having rates nearly twice as high as others. Budget for property taxes in your cash flow projections, and consider the impact of potential reassessments after property transfers.
Regulations for short-term rentals vary by municipality in New Hampshire, with some towns imposing restrictions or requiring permits for vacation rentals.
Research local short-term rental regulations before acquiring properties intended for vacation rental use. Understand that regulations can vary significantly by town, with some municipalities being more restrictive than others. Consider working with property managers who specialize in short-term rentals and are familiar with local regulations.
Common questions about New Hampshire 1031 exchanges
No, New Hampshire has no state income tax on earned income or capital gains, meaning there is no state-level capital gains tax on real estate transactions, including 1031 exchanges. The state does have an Interest & Dividends Tax, but this does not apply to capital gains from real estate transactions, and it's being phased out with eventual repeal planned.
New Hampshire does not have state-specific licensing requirements for Qualified Intermediaries beyond federal guidelines. However, it's still important to work with a reputable QI with experience in New Hampshire real estate transactions.
You need to file federal Form 8824 (Like-Kind Exchanges) with your federal tax return. Since New Hampshire has no state income tax on capital gains, there is no state tax return filing requirement for the exchange itself. However, a Real Estate Transfer Tax Declaration of Consideration Form (CD-57) must be filed with the county registry of deeds when transferring real property in New Hampshire.
New Hampshire imposes a Real Estate Transfer Tax (RETT) of $0.75 per $100 of value (0.75%), split equally between buyer and seller unless otherwise negotiated. This tax applies to property transfers, including those in 1031 exchanges, though certain exemptions may apply.
New Hampshire's real estate market has significant seasonal variations, with higher transaction volumes in spring and summer compared to winter months. This seasonality can impact exchange timelines and should be factored into planning. Winter months (December-February) typically see lower inventory and transaction volumes, while spring and summer (April-August) are the most active periods.
Yes, 1031 exchanges can be used for interstate transactions. In fact, many investors exchange properties from high-tax states like Massachusetts, Connecticut, or New York for properties in New Hampshire to take advantage of New Hampshire's lack of state income tax. However, be aware that the state where the relinquished property is located may still impose state-level taxes on the transaction.