Can you do a 1031 exchange in Kentucky?

Yes. Kentucky conforms to federal Section 1031, so a properly structured like-kind exchange defers both your federal and Kentucky capital-gains tax. You still must use a Qualified Intermediary, identify replacement property within 45 days, and close within 180 days.

What is the capital-gains tax rate in Kentucky?

Kentucky taxes capital gains as ordinary income, with a top marginal rate of about 4%. A 1031 exchange defers this state tax along with the federal tax.

Does Kentucky have a 1031 exchange clawback rule?

No. Kentucky does not impose a 1031 exchange clawback, so it does not separately track deferred gain on out-of-state replacement property.

Is there tax withholding when I sell property in Kentucky?

Nonresident seller withholding may apply at closing.

1031 exchange in

Kentucky 1031 Exchange & Capital Gains Tax Rules

Kentucky conforms to federal Section 1031, so a properly structured like-kind exchange defers both your federal and Kentucky capital-gains tax. Kentucky generally taxes capital gains as ordinary income at rates up to 4%. Kentucky uses a flat income tax.

Key facts

State tax on capital gains: Up to 4%
Federal §1031 conformity: Conforms — exchange defers state tax
Closing withholding: Nonresident seller withholding may apply at closing.
Clawback rule: No — 45 days to identify, 180 days to close

What to know about exchanging in Kentucky

Kentucky taxes capital gains as ordinary income, with a top marginal rate of about 4%.
Kentucky conforms to federal §1031, so a valid exchange defers state capital-gains tax too.
Federal timelines apply: 45 days to identify and 180 days to close on the replacement property.
Closing note: Nonresident seller withholding may apply at closing.

Kentucky 1031 exchange FAQ

Can you do a 1031 exchange in Kentucky?: Yes. Kentucky conforms to federal Section 1031, so a properly structured like-kind exchange defers both your federal and Kentucky capital-gains tax. You still must use a Qualified Intermediary, identify replacement property within 45 days, and close within 180 days.
What is the capital-gains tax rate in Kentucky?: Kentucky taxes capital gains as ordinary income, with a top marginal rate of about 4%. A 1031 exchange defers this state tax along with the federal tax.
Does Kentucky have a 1031 exchange clawback rule?: No. Kentucky does not impose a 1031 exchange clawback, so it does not separately track deferred gain on out-of-state replacement property.
Is there tax withholding when I sell property in Kentucky?: Nonresident seller withholding may apply at closing.

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