1031 Exchange in Ohio: A Plain-English Investor Guide.

A 1031 exchange in Ohio follows the federal Section 1031 framework. The IRS gives you 45 days to identify a replacement property and 180 days to close, and all sale proceeds must be routed through a Qualified Intermediary. Ohio conforms to federal 1031 and imposes a graduated state income tax with a current top rate of approximately 3.5%. The state-level deferral benefit is modest in absolute terms but real, and Ohio’s central location gives investors access to a broad range of in-state and adjacent-state replacement property.

Last updated: June 2026 · For Ohio-resident accredited investors

The federal rules in 60 seconds.

A 1031 exchange lets you sell investment real estate and reinvest the proceeds into like-kind replacement property while deferring federal capital gains tax. Two firm deadlines apply: Day 45 to identify replacement property in writing to your Qualified Intermediary, and Day 180 to close on it.

Your sale proceeds must go to the QI, not to you. Taking constructive receipt blows up the exchange. For the complete federal framework, see our 1031 Exchange Guide.

Ohio’s tax interaction with Federal 1031.

Ohio imposes a graduated state personal income tax. The top marginal rate has declined in recent years and currently sits at approximately 3.5% under recent rate reductions. Ohio conforms to federal Section 1031, so a properly structured 1031 exchange defers both federal and Ohio state tax on the gain.

Ohio does not have a state-level clawback or annual reporting requirement comparable to California’s FTB 3840. Once a 1031 is properly executed under federal rules, Ohio respects the deferral without additional state filings.

Practical implication. Several Ohio municipalities impose local income taxes that may apply to capital gains depending on residency and source rules. The most important examples are Cleveland, Columbus, Cincinnati, and Toledo. Local treatment of capital gains varies and is not always consistent with state treatment. Confirm with your CPA whether your municipality taxes capital gains, and whether the federal 1031 deferral flows through to the local tax base.

Ohio also imposes a conveyance fee (real estate transfer tax) at the county level, generally $1 per $1,000 of consideration plus a county-specific permissive fee (typically $3 per $1,000, for a combined $4 per $1,000 in many counties). The conveyance fee is a transfer tax, not an income tax, and applies regardless of 1031 treatment.

Qualified Intermediary notes for Ohio investors.

Ohio does not impose a state-specific QI licensing regime. National QIs serving the broader market are available to Ohio investors. The standard diligence questions apply:

Ohio closings are typically handled by title agencies. Confirm the QI has worked with Ohio title agencies in your county and is familiar with the conveyance fee payment process and the appropriate documentation for the recorder of deeds.

Common questions from Ohio investors.

Where Ohio investors find replacement property.

Ohio investors have a broad geographic playbook. In-state replacement is strong in Columbus (multifamily, industrial), Cleveland (medical office, industrial), and Cincinnati (multifamily, logistics). Adjacent-state options include Indiana, Kentucky, Michigan, and Pennsylvania. Sunbelt destinations such as Tennessee, North Carolina, Florida, and Texas are common for investors looking to diversify out of Midwest exposure.

DSTs holding institutional-grade Midwest and Sunbelt property are common replacement vehicles for Ohio investors who want passive ownership and complete diversification within the 45-day window. Net-leased industrial and multifamily are typical product types for this profile.

For more on how DSTs work as 1031 replacement property, see our DSTs Explained guide. For evaluating the sponsor of any DST you consider, including the framework we apply to our own offerings, see our Sponsor Evaluation Framework.