Wisconsin follows federal 1031 exchange rules with no state-specific requirements, allowing investors to defer up to 100% of capital gains taxes on qualifying property exchanges.
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
3.54% - 7.65%
Yes
Not required for 1031 exchanges
Same as ordinary income
Varies by municipality
• Federal Form 8824 • Wisconsin Schedule 2
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 Wisconsin, consider property tax implications and local zoning regulations when identifying properties.
Work with a qualified intermediary who is familiar with Wisconsin's real estate market and tax environment. Wisconsin follows federal 1031 exchange rules without state-specific modifications.
Complete the purchase of your replacement property within 180 days of selling your relinquished property. Wisconsin closing processes typically take 30-45 days.
Report your 1031 exchange on your federal tax return using Form 8824. For Wisconsin state taxes, report the exchange on your Wisconsin Schedule 2, following federal treatment.
Wisconsin property tax rates vary significantly by municipality, with a statewide average of approximately 1.5% of assessed value. When exchanging properties in Wisconsin, carefully review the property tax implications of your replacement property, as rates can vary significantly between municipalities.
Review local zoning regulations and development codes, which vary significantly between Wisconsin municipalities. Madison, Milwaukee, and other major cities often have stricter regulations, while rural areas may have fewer restrictions.
Wisconsin's real estate market is highly seasonal, with more activity in spring and summer and slower periods during winter months. Plan your 1031 exchange timeline with seasonal considerations in mind, particularly for the 45-day identification period.
Recent changes and upcoming regulations affecting 1031 exchanges
Governor Evers' 2025-27 Capital Budget proposal includes infrastructure projects designed to generate over $7.5 billion in economic activity and create 41,300 jobs across Wisconsin.
Wisconsin continues to conform to federal 1031 exchange rules without state-specific modifications, providing a straightforward environment for investors.
Wisconsin's Department of Transportation has implemented a Six Year Highway Improvement Program for 2025-2030, potentially affecting property values along major transportation corridors.
Plan and track your critical exchange deadlines
Enter the closing date of your relinquished property to calculate your 1031 exchange deadlines:
Real 1031 exchange examples from Wisconsin
Current market conditions and future forecasts
Very strong growth market with median home prices showing a 29.4% year-over-year increase. The market is benefiting from its proximity to Milwaukee and strong school districts.
Strong growth market with median home prices around $301,131, reflecting a 2.6% year-over-year increase. The market is supported by state government, the University of Wisconsin, and a growing technology sector.
Moderate growth market with median home prices showing a 10.8% year-over-year increase. The market is benefiting from urban revitalization efforts and a growing downtown population.
Long-term appreciation analysis in Wisconsin
Understanding historical property appreciation patterns can help you identify areas with strong long-term growth potential for your 1031 exchange replacement property.
32.6%
58.4%
87.2%
Continued strong growth expected, with 8.7% year-over-year appreciation projected
42.3%
68.6%
102.1%
Very strong growth expected, with 29.4% year-over-year price increases in February 2025
38.6%
64.2%
95.7%
Strong continued growth expected, with 2.6% year-over-year price increases in March 2025
Current rental trends and opportunities in Wisconsin
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 | $1,500 - $2,000 (1BR) | 3.5% | up | 5.0% - 6.0% |
| Class B Apartments | $1,100 - $1,500 (1BR) | 3.0% | up | 5.5% - 6.5% |
| Student Housing | $800 - $1,200 (per bedroom) | 2.0% | up | 5.2% - 6.2% |
Madison's rental market serves a diverse tenant base, including state government employees, university faculty and staff, students, healthcare workers, and technology sector employees. Approximately 50% of renters are under 35, and 30% have household incomes above $75,000.
Madison has somewhat stricter landlord-tenant regulations than other parts of Wisconsin, with specific provisions related to security deposits, lease terms, and tenant rights. The city is generally supportive of property investment and development, particularly for multi-family and mixed-use properties.
Madison's rental market is projected to see continued growth, with annual rent increases of 3-4%. The city's status as the state capital, combined with the University of Wisconsin and a growing technology sector, helps maintain low vacancy rates and strong rental demand.
| Property Type | Avg. Rent | Vacancy Rate | Rent Trend | Cap Rate |
|---|---|---|---|---|
| Luxury Apartments | $1,400 - $1,900 (1BR) | 4.0% | up | 5.2% - 6.2% |
| Class B Apartments | $1,000 - $1,400 (1BR) | 3.5% | up | 5.8% - 6.8% |
| Single-Family Homes | $1,500 - $2,000 (3BR) | 3.0% | up | 5.5% - 6.5% |
Milwaukee's rental market serves a diverse tenant base, including manufacturing workers, healthcare employees, university students and faculty, and service industry employees. Approximately 40% of renters are under 35, and 25% have household incomes above $60,000.
Milwaukee has standard landlord-tenant regulations with some additional provisions related to property maintenance and inspections. The city is generally supportive of property investment and development, particularly for urban revitalization projects.
Milwaukee's rental market is projected to see moderate growth, with annual rent increases of 3-4%. The city's urban revitalization efforts, combined with a growing downtown population and strong healthcare and manufacturing sectors, help maintain solid rental demand.
| Property Type | Avg. Rent | Vacancy Rate | Rent Trend | Cap Rate |
|---|---|---|---|---|
| Luxury Apartments | $1,200 - $1,600 (1BR) | 3.8% | up | 5.5% - 6.5% |
| Class B Apartments | $900 - $1,200 (1BR) | 3.2% | up | 6.0% - 7.0% |
| Single-Family Homes | $1,300 - $1,800 (3BR) | 2.8% | up | 5.8% - 6.8% |
Green Bay's rental market serves a diverse tenant base, including manufacturing workers, healthcare employees, university students and faculty, and service industry employees. Approximately 35% of renters are under 35, and 20% have household incomes above $60,000.
Green Bay has standard landlord-tenant regulations without significant additional restrictions. The city is generally supportive of property investment and development, particularly for multi-family and mixed-use properties.
Green Bay's rental market is projected to see strong growth, with annual rent increases of 4-5%. The city's strong manufacturing base, growing healthcare sector, and cultural amenities anchored by the Packers help maintain low vacancy rates and strong rental demand.
Key mistakes to avoid in your 1031 exchange
Wisconsin property tax rates vary significantly by municipality, with some areas having much higher rates than others. This variation can significantly impact the carrying costs of replacement properties.
Research property tax rates in target municipalities before identifying replacement properties. Work with real estate professionals who have specific knowledge of local property tax environments.
Wisconsin's real estate market is highly seasonal, with more activity in spring and summer and slower periods during winter months.
Plan your 1031 exchange timeline with seasonal considerations in mind, particularly for the 45-day identification period. Consider working with a real estate professional who can help identify suitable properties even during slower market periods.
Wisconsin is primarily an attorney-closing state, and closing practices can vary between regions, potentially affecting transaction timelines.
Work with qualified intermediaries and real estate professionals who are familiar with Wisconsin's closing practices. Build additional time into your exchange timeline to account for potential delays.
Wisconsin's real estate markets vary significantly between Madison, Milwaukee, Green Bay, and other regions, with different price points, appreciation rates, and rental dynamics.
Research regional economic drivers, rental demand, and appreciation trends before identifying replacement properties. Work with real estate professionals who have specific knowledge of your target market within Wisconsin.
Common questions about Wisconsin 1031 exchanges
No, Wisconsin follows federal 1031 exchange rules without state-specific modifications. This creates a straightforward environment for investors, reducing compliance costs and minimizing the risk of technical errors in the exchange process. Wisconsin does not have specific non-resident withholding requirements for 1031 exchanges, simplifying the process for out-of-state investors.
Yes, you can exchange a property from any state for a property in Wisconsin. Section 1031 is a federal provision that allows for exchanges across state lines. This is a common practice, particularly for investors from higher-tax states like Illinois, Minnesota, and Michigan seeking to invest in Wisconsin to take advantage of its strong appreciation, higher cap rates, and quality of life factors.
Wisconsin's real estate market varies by region. Greenfield and Menomonee Falls are showing very strong growth, with year-over-year price increases of 29.4% and 26.8% respectively. These markets can be competitive for desirable properties. Madison, Milwaukee, and Green Bay maintain strong markets with good inventory. Other areas of the state typically offer more balanced markets. Working with a local real estate professional with strong market knowledge is essential for identifying suitable replacement properties within the 45-day identification period.
Property tax rates in Wisconsin vary significantly by municipality, with a statewide average of approximately 1.5% of assessed value. However, rates can vary significantly, with some areas having much higher rates than others. Property taxes are assessed and collected at the local level, and properties are typically reassessed annually. Wisconsin also has a transfer tax of $3.00 per $1,000 of value (0.3%) when you eventually sell your replacement property.