1031 Exchange in Nebraska: Documentary Stamp Tax, Falling Rates and DSTs

Nebraska's income tax starts from federal AGI, so the deferral carries over and recognized gain is ordinary income

Nebraska computes taxable income from federal adjusted gross income with the adjustments listed in Neb. Rev. Stat. 77-2716, and none of those adjustments touches a like-kind exchange. A gain that federal law defers under the 1031 rules is therefore deferred for Nebraska too, with no separate state election or form.

Nebraska has no preferential capital gains rate. The only special capital gains election, in 77-2715.09, is a once-in-a-lifetime exclusion for stock of an employer corporation; real estate never qualifies, so recognized gain on land or buildings is taxed on the ordinary schedule.

That schedule (77-2715.03) has four inflation-indexed brackets. For tax year 2026 the rates are 2.46%, 3.51% and 4.55% on the top two brackets; starting with tax years that begin January 1, 2027, the top rate falls to 3.99% under LB 754 of 2023.

• Boot recognized in 2026 is taxed at up to 4.55%; the same boot recognized in 2027 would face 3.99%.
• Because the starting point is federal AGI, depreciation recapture flows into Nebraska income at those same ordinary rates.

The documentary stamp tax is paid on both deeds of a forward exchange, and it rose to $3.32 in July 2026

Nebraska's documentary stamp tax is $3.32 for each $1,000 of value on deeds recorded on or after July 18, 2026, up from $2.32 (September 3, 2025 to July 17, 2026) and $2.25 before that. The 2026 increase under LB 1067 is scheduled to revert to $2.32 on January 1, 2032.

The grantor pays it at the register of deeds as the deed is presented for recording, and every deed must be accompanied by Form 521, the Real Estate Transfer Statement. Item 9 of Form 521 asks whether the transfer was part of an IRC section 1031 exchange by the buyer or seller, and item 25 is where an exemption number goes.

Department of Revenue Directive 25-2 (July 8, 2025) settles how exchanges are stamped: a typical exchange 'will not affect' the register's duty to collect. In a forward exchange with a qualified intermediary, the register collects tax on the relinquished deed to your buyer and again on the replacement deed from your seller.

• A $1,000,000 relinquished sale now carries $3,320 of stamp tax; a Nebraska replacement of the same value adds another $3,320.
• In a simultaneous two-party swap, each deed is taxed on the value of the property received.
• Exemptions that can apply to investors: deeds to a family-owned entity (5), into a revocable trust (4), trustee to beneficiary (20), and partnership or LLC to a member (21). A 1031 exchange is not on the list.

Reverse exchanges: the parked deed is exempt only if the accommodation agreement says the right words

When an exchange accommodation titleholder parks either property, Directive 25-2 identifies three deeds. The two arm's-length deeds, from the seller of the replacement property and to the buyer of the relinquished property, are taxed; the deed to or from the titleholder is exempt.

To claim that exemption, the agreement must state that the titleholder 'is acting solely as [Titleholder]'s agent for all purposes, except for federal income tax purposes', the transfer must be to or from the titleholder, and both parties claim exemption number 4 on Form 521 with a copy of the exchange agreement and a disclosure of the parties.

The directive warns registers not to presume that every reverse exchange qualifies. If the relinquished property never sells and the titleholder reconveys the replacement property to you, that reconveyance is also exempt.

Out-of-state owners: Nebraska-source gain, no withholding at closing, no claw-back afterward

Gain from the sale of property located in Nebraska is Nebraska-source income for a nonresident, reported on a Nebraska Form 1040N for the year it is recognized. Nebraska's nonresident withholding rules (Information Guide 8-515) cover wages and personal-service payments; nothing is withheld from real estate sale proceeds at closing.

Nebraska publishes no rule that follows deferred gain to an out-of-state replacement property. Once a nonresident completes the exchange, the state's interest ends unless boot is recognized or the exchange fails, in which case the recognized gain is Nebraska income for that year.

A Nebraska resident owes tax on all income wherever earned and takes a credit under 77-2730 for income tax paid to another state on income sourced there, limited to the proportion of Nebraska tax that the out-of-state income bears to total income.

Farmland exchanges: the 75% assessment stays with the land, not with you

Nebraska assesses agricultural and horticultural land at or near 75% of actual value while all other real property is assessed at or near 100%, and land under special valuation (77-1344) is assessed at 75% of its agricultural-use value. Every parcel is valued as of January 1 at 12:01 a.m.

For an investor selling inherited farmland, that assessment is the buyer's benefit going forward; it has no effect on the stamp tax, which is computed on the full value stated on Form 521. At $3.32 per $1,000, a $4,000,000 quarter section costs the seller $13,280 to record.

If you exchange the farm into a DST or into commercial property in another state, none of Nebraska's agricultural valuation rules travel with the proceeds; the replacement property is assessed under its own state's system.