Georgia cut its flat income tax rate to 4.99% for 2026 under HB 463, and it taxes capital gains on real estate at that same rate as ordinary income, with no special discount for long-held property. On top of the federal bill, that makes Georgia capital gains tax on real estate a real cost for investors, and a 1031 exchange Georgia sellers complete defers both layers. Nonresidents also face 3% withholding at closing unless they file the right affidavit.
Reviewed by Jon Hilley, CEO & Founder of 1031 Specialists. Last reviewed September 29, 2026.
| State tax on real estate gains | Flat 4.99% for 2026 (down from 5.19% in 2025) |
|---|---|
| Long-term capital gains treatment | Taxed as ordinary income at the flat rate; no separate capital gains rate or exclusion |
| Nonresident withholding at closing | 3% of the sales price, or 3% of the gain with an affidavit |
| Withholding form | Form G2-RP (buyer remits); IT-AFF2 gain affidavit; IT-AFF3 exemption certificate, which covers like-kind exchanges |
| Transfer or conveyance tax (a 1031 does not defer it) | $1 per $1,000 of price, filed on Form PT-61; intangible recording tax of $1.50 per $500 on new long-term loans (max $25,000) |
| Clawback on out-of-state replacement property | None |
| Conforms to Section 1031 | Yes |
| Local income tax | None |
Table of contents
- How much is capital gains tax on real estate in Georgia?
- Georgia tax on a $300,000 gain: worked example
- Georgia nonresident withholding: G2-RP and the exchange exemption
- Georgia transfer tax and intangible recording tax
- Georgia conformity and clawback rules
- Timing a Georgia sale around the rate cuts
- Moving into or out of Georgia
- Where Georgia 1031 exchanges happen
- Federal 1031 rules in brief
- Common Georgia 1031 exchange mistakes
- Start your Georgia exchange with 1031 Specialists
- Frequently asked questions
- Sources
How much is capital gains tax on real estate in Georgia?
For 2026 Georgia taxes individual income, including gain on property, at a single flat rate of 4.99%. The Governor signed HB 463 on May 11, 2026, lowering the rate from 5.19% retroactive to January 1, 2026. The law keeps further annual cuts on the books until the rate reaches 3.99%, but each step can be paused if state revenue targets are missed, so the rate for 2027 and later is not guaranteed.
Georgia gives no preferential treatment to long-term gains. A property held for 20 years and one held for 13 months are taxed at the same 4.99%, and depreciation recapture is taxed the same way as the rest of the gain. There is no city or county income tax in Georgia, including in Atlanta.
The federal layer on top:
- Long-term capital gains at 0%, 15% or 20% (the 20% bracket begins above $545,500 single and $613,700 joint for 2026).
- Up to 25% on unrecaptured Section 1250 gain from depreciation.
- 3.8% net investment income tax above $200,000 single or $250,000 joint MAGI.
Because Georgia starts from federal adjusted gross income, gain deferred federally under Section 1031 is deferred for Georgia as well.
Georgia tax on a $300,000 gain: worked example
Assumptions: a $300,000 long-term gain on a Georgia rental, $100,000 of it unrecaptured §1250 depreciation, joint filers already in the top federal bracket and paying Georgia's flat rate. Georgia applies 4.99% to the full $300,000.
| Unrecaptured §1250 gain: 25% on $100,000 | $25,000 |
|---|---|
| Long-term capital gain: 20% on $200,000 | $40,000 |
| Net investment income tax: 3.8% on $300,000 | $11,400 |
| Federal subtotal | $76,400 |
| Georgia tax: 4.99% x $300,000 | $14,970 |
| Total deferred by a full 1031 exchange | $91,370 |
Georgia adds about 20% to the federal bill in this case. If the sale slips into a later year, the rate may be lower, but waiting to save a fraction of a point rarely beats deferring the whole $91,370. Model the recapture piece with our depreciation recapture calculator, and compare paying the tax against exchanging with the capital gains vs. 1031 comparison.
Georgia nonresident withholding: G2-RP and the exchange exemption
When the seller is not a Georgia resident, the buyer must withhold and send the Department of Revenue 3% of the total sales price on Form G2-RP. Payment is due by the last day of the month after the month of closing. The seller has three ways to change that number:
- IT-AFF2, affidavit of gain. Withholding drops to 3% of the gain instead of 3% of the price. On a $900,000 sale with a $250,000 gain, that is $7,500 instead of $27,000.
- IT-AFF3, seller's certificate of exemption. One of the listed exemptions is a like-kind exchange where the income from the sale is not subject to federal or state income tax. This is the form a 1031 seller signs, supported by the exchange agreement with the qualified intermediary.
- IT-AFF1, residency affidavit. Georgia residents sign this to show no withholding applies.
The withholding is a credit against the seller's Georgia return, not an extra tax, but on a partial exchange where you take some cash out, expect withholding on the portion of gain you recognize. Get the IT-AFF3 to the closing attorney at least a week before closing; Georgia closings are run by attorneys, and they will not release funds without it. Foreign sellers also face federal FIRPTA withholding; see our guide to FIRPTA for foreign sellers.
Georgia transfer tax and intangible recording tax
Georgia's transfer costs are among the lower ones in the Southeast, and none of them are deferred by a 1031.
- Real estate transfer tax: $1 for the first $1,000 of price and 10 cents for each additional $100, so effectively $1 per $1,000. A $900,000 sale costs about $900. The seller is legally responsible unless the contract shifts it to the buyer. It is reported on Form PT-61, filed electronically through GSCCCA.
- Intangible recording tax: $1.50 for each $500 of the face amount of a long-term note secured by Georgia real estate, capped at $25,000 per note. This lands on the replacement purchase if you finance it: a $700,000 loan costs $2,100.
There is no separate city transfer tax in Atlanta or Savannah and no mansion tax.
Georgia conformity and clawback rules
Georgia adopts the Internal Revenue Code by annual reference, so Section 1031 applies for state purposes. Georgia has no clawback: if you exchange Georgia property for a building in Tennessee or Texas, Georgia does not require an annual filing to track the deferred gain. A nonresident who exchanges out of Georgia generally owes Georgia nothing more on that gain, and a Georgia resident owes Georgia tax only when a later taxable sale happens while they still live here.
Report the exchange on federal Form 8824 and attach it to the Georgia return, which follows federal AGI.
Timing a Georgia sale around the rate cuts
With the rate falling, some sellers ask whether to wait. Under HB 463 the next step-down cannot happen before January 1, 2027, and it depends on revenue tests. Two practical points:
- Installment sales are taxed at the rate in the year each payment is received, so later payments may benefit from lower rates.
- A 1031 makes the timing question moot for the deferred portion. If you later sell the replacement property in a taxable sale, you pay the rate in effect that year, which under current law would be lower than 4.99%.
Moving into or out of Georgia
Georgia taxes nonresidents on gain from Georgia real estate, which is why the G2-RP withholding exists. If you have moved to Florida or Tennessee and still own Atlanta rentals, selling them outright means a Georgia nonresident return; exchanging them, even into property in your new state, defers the Georgia tax and there is no clawback to track it.
Investors moving into Georgia from California or Oregon should know that those states can still claim gain from property they exchanged into Georgia. Georgia residents who exchange into North Carolina or South Carolina rentals owe Georgia nothing until a taxable sale while resident here.
Where Georgia 1031 exchanges happen
Metro Atlanta drives most of the volume: suburban multifamily, single-family rental portfolios, industrial space near Hartsfield-Jackson and along I-85 and I-75, and medical office. See our page on a 1031 exchange in Atlanta. Savannah's port has made warehouse and distribution property a frequent target, and Augusta, Athens, Macon and Columbus trade mostly in student and workforce housing and small commercial buildings. The North Georgia mountains carry cabin rentals, where the vacation-home rules for exchanges matter.
Federal 1031 rules in brief
You have 45 days after the sale to identify replacements in writing and 180 days to close, or your return due date if sooner. A qualified intermediary holds the money the whole time. Full deferral means buying equal or greater value, reinvesting all net cash and replacing the debt paid off. Start with our 1031 exchange guides, check your list with the 45-day identification validator and estimate cash boot with the partial 1031 boot calculator.
Common Georgia 1031 exchange mistakes
- Signing IT-AFF2 instead of IT-AFF3. The gain affidavit still leaves 3% of the gain withheld; the exemption certificate is what stops withholding on a full exchange.
- Using the old 5.19% rate. Estimates made before May 2026 overstate the Georgia tax; 2026 sales are taxed at 4.99%.
- Forgetting the intangible recording tax. A large replacement loan can add thousands to closing costs, up to $25,000 per note.
- Holding a mountain cabin mainly for personal use. Blue Ridge or Helen cabins used by the family more than rented may not qualify.
- Taking cash out without planning for withholding. Recognized boot on a nonresident sale triggers G2-RP withholding on that portion.
Start your Georgia exchange with 1031 Specialists
Bring us in before closing so the closing attorney has our exchange agreement, assignment and the IT-AFF3 in the file. We hold funds in a segregated account and keep your deadlines. Start your exchange or schedule an intro call.
Frequently asked questions
What is the Georgia capital gains tax rate on real estate for 2026?
Georgia taxes capital gains as ordinary income at a flat 4.99% for 2026, after HB 463 cut the rate from 5.19%. There is no lower rate for long-term gains and no local income tax.
How can I avoid capital gains tax on real estate in Georgia?
A 1031 exchange into other investment real estate defers both federal and Georgia tax, since Georgia follows federal AGI. Your primary home may qualify for the federal Section 121 exclusion, which Georgia also follows.
How much does Georgia withhold when a nonresident sells property?
The buyer withholds 3% of the sales price on Form G2-RP, or 3% of the gain if the seller signs affidavit IT-AFF2. A seller doing a qualifying like-kind exchange can sign Form IT-AFF3 to claim an exemption.
What is the Georgia real estate transfer tax?
It is $1 per $1,000 of the sale price, reported on Form PT-61. Georgia also charges an intangible recording tax of $1.50 per $500 on long-term loans secured by the property, up to $25,000 per note. A 1031 exchange does not defer either.
Does Georgia claw back gain if I exchange into another state?
No. Georgia has no clawback or annual tracking form for gain deferred into out-of-state replacement property.
Will the Georgia rate keep falling?
HB 463 schedules further annual cuts starting in 2027 until the rate reaches 3.99%, but each cut can be delayed if revenue conditions are not met.
Sources
- Office of the Governor: HB 463 signing, May 11, 2026
- HB 463 as passed
- Georgia DOR: Form G2-RP withholding on real property sales by nonresidents
- Georgia DOR: Form IT-AFF3 seller's certificate of exemption
- Georgia DOR: real estate transfer tax
- Georgia DOR: intangible recording tax
- IRS: About Form 8824
Related: Florida, South Carolina, North Carolina, Tennessee and all 50 states.
This is general information about Georgia and federal tax law, not tax or legal advice. Rates and forms change, so confirm your situation with a CPA or Georgia attorney.
