Kansas taxes real estate gains as ordinary income in two brackets, 5.2% and 5.58%, and for a joint filer nearly any sizable gain lands in the 5.58% bracket. That is the sharpest contrast in the Kansas City metro, because Missouri across State Line Road now exempts individuals' capital gains. A 1031 exchange in Kansas defers the Kansas tax and the federal tax together, about $93,140 on a $300,000 gain for a high earner.
Reviewed by Jon Hilley, CEO & Founder of 1031 Specialists. Last reviewed September 29, 2026.
| State tax on real estate gains | 5.2% on the first $46,000 of taxable income (joint) or $23,000 (single), 5.58% above that, for 2026 |
|---|---|
| Long-term capital gains treatment | No preference; gains are taxed as ordinary income |
| Nonresident withholding at closing | None for individual sellers |
| Withholding form | None at closing; nonresidents file Form K-40 with Schedule S, Part B |
| Transfer or conveyance tax (a 1031 does not defer it) | No transfer tax; the mortgage registration tax was fully repealed in 2019. Recording fees apply |
| Clawback on out-of-state replacement property | None |
| Conforms to Section 1031 | Yes, Kansas starts from federal adjusted gross income |
Table of contents
- How much is capital gains tax on real estate in Kansas?
- Kansas tax on a $300,000 gain: worked example
- The Kansas City state line and your next sale
- Does Kansas withhold tax when a nonresident sells?
- Kansas transfer taxes: none
- Kansas conformity and clawback rules
- Moving into or out of Kansas
- Where Kansas 1031 exchanges happen
- Federal 1031 rules that apply in Kansas
- Common Kansas 1031 exchange mistakes
- Start your Kansas 1031 exchange
- Frequently asked questions
- Sources
How much is capital gains tax on real estate in Kansas?
Kansas capital gains tax on real estate follows the same two-bracket schedule as wages. The Kansas Department of Revenue's 2026 rate schedule taxes married couples filing jointly at 5.2% on the first $46,000 of Kansas taxable income and 5.58% on the rest; single filers hit 5.58% above $23,000. There is no lower rate for long-term gains and no exclusion for property held a long time.
Depreciation recapture is taxed at the same 5.58%. Federally the unrecaptured Section 1250 portion is taxed at up to 25%, which you can estimate with our depreciation recapture calculator. Kansas has no local income tax on individuals, so the rate is the same in Overland Park, Wichita or Dodge City.
Kansas tax on a $300,000 gain: worked example
Assumptions: a long-term gain of $300,000 on a Kansas rental, $100,000 of it unrecaptured Section 1250 depreciation, a married couple filing jointly whose other income already fills the 5.2% bracket and the top federal bracket.
| Line | Math | Tax |
|---|---|---|
| Unrecaptured §1250 gain (depreciation) | 25% × $100,000 | $25,000 |
| Remaining long-term gain | 20% × $200,000 | $40,000 |
| Net investment income tax | 3.8% × $300,000 | $11,400 |
| Federal subtotal | $76,400 | |
| Kansas income tax | 5.58% × $300,000 (no exclusion) | $16,740 |
| Total tax a full 1031 exchange defers | $93,140 |
The same sale by a Missouri individual on Missouri property would carry a $0 state line. See how a cash sale compares with an exchange on the capital gains vs. 1031 exchange comparison.
The Kansas City state line and your next sale
Kansas City investors routinely trade across State Line Road, and since 2025 that choice carries a tax consequence. Missouri lets individuals subtract 100% of capital gains; Kansas taxes them at up to 5.58%. What matters is where the property sits and where you live when you eventually sell:
- A Kansas resident pays Kansas tax on any gain, including gain on Missouri property.
- A Missouri resident who owns Johnson County property pays Kansas tax on that gain as a nonresident, and Missouri's deduction does not help.
- A Missouri resident who exchanges a Kansas property into Missouri property converts a future Kansas-taxable gain into one that, under current law, Missouri does not tax.
An exchange defers the gain on the property you sell; it does not wipe out Kansas's claim if you stay a Kansas resident. Our Missouri 1031 exchange guide covers the Missouri side.
Does Kansas withhold tax when a nonresident sells?
No. Kansas has no withholding requirement at closing for individual sellers, so your title company sends the proceeds to your qualified intermediary without a state holdback, and no exemption certificate is needed for a 1031.
Nonresidents do owe Kansas tax on Kansas-source gain, and the way Kansas computes it is unusual. A nonresident figures Kansas tax as if all income were Kansas income, then multiplies it by a nonresident allocation percentage (Kansas-source income divided by total income) from Schedule S, Part B. That means your out-of-state income pushes the Kansas gain into the 5.58% bracket even though Kansas only taxes its share. Foreign sellers also face federal FIRPTA withholding; see our FIRPTA guide.
Kansas transfer taxes: none
Kansas has no real estate transfer tax. It used to charge a mortgage registration tax of 0.26% of the loan amount when a mortgage was recorded, which mattered for leveraged replacement purchases, but the legislature phased it down from 2015 and repealed it entirely beginning in 2019. County registers of deeds raised recording fees to make up the revenue, so expect per-page recording charges instead. Kansas also requires a Real Estate Sales Validation Questionnaire with most deeds. Because a 1031 does not defer closing costs anyway, the absence of a transfer tax keeps more exchange money available to reinvest.
Kansas conformity and clawback rules
Kansas computes income starting from federal adjusted gross income, so a valid Section 1031 exchange defers Kansas tax automatically. Kansas does not require annual reporting on out-of-state replacement property and has no clawback like California's FTB 3840 or Oregon's OR-24. If you remain a Kansas resident, you owe Kansas tax on the deferred gain when you sell the replacement in a taxable sale, wherever it is located.
Moving into or out of Kansas
Kansas retirees often exchange into property in Texas, Colorado or Arizona and then move. Because Kansas has no clawback, a later sale of that out-of-state property after you become a nonresident is outside Kansas tax. Moving to Missouri works similarly for property outside Kansas, but any Kansas property you keep stays Kansas-source.
Where Kansas 1031 exchanges happen
- Johnson County. Overland Park, Olathe and Lenexa multifamily, suburban office and industrial along I-35.
- Wichita. Industrial space tied to aviation manufacturing, workforce housing and net-leased retail.
- Lawrence, Manhattan and Topeka. Student housing near the University of Kansas and Kansas State, plus government-anchored office.
- Western Kansas farmland and ranchland. Often exchanged into more land or into net-leased property for owners stepping back from operations.
Federal 1031 rules that apply in Kansas
Identify replacement property within 45 days of the sale and close within 180 days. A qualified intermediary holds the proceeds the whole time. Buy equal or greater value and replace the debt you retired to defer everything. Try the 45-day identification validator and the 1031 exchange calculator, or read our 1031 exchange guides.
Common Kansas 1031 exchange mistakes
- Assuming Missouri's exemption applies on the Kansas side. It does not; Kansas property is taxed by Kansas.
- Using the 5.2% rate in projections. Most sellers with a meaningful gain pay 5.58% on nearly all of it.
- Forgetting the nonresident allocation method. Out-of-state income raises the effective Kansas tax on a nonresident's Kansas gain.
- Budgeting for the old mortgage registration tax. It has been gone since 2019; recording fees replaced it.
Start your Kansas 1031 exchange
Open the exchange before your sale closes. Start your exchange or book an intro call to talk through your Kansas sale and replacement plans.
Frequently asked questions
How can I avoid capital gains tax on real estate in Kansas?
A 1031 exchange into like-kind investment property defers both the federal tax and Kansas's tax of up to 5.58%. Holding exchanged property until death can remove the deferred gain through a stepped-up basis.
What is the Kansas capital gains tax rate in 2026?
Kansas taxes gains as ordinary income: 5.2% on the first $46,000 of taxable income for joint filers ($23,000 single) and 5.58% above that.
Does Kansas have a real estate transfer tax?
No. Kansas has no transfer tax, and its mortgage registration tax was fully repealed in 2019. Only recording fees apply.
Does Kansas withhold tax from nonresident sellers at closing?
No. There is no Kansas withholding at closing. Nonresidents report Kansas-source gain on Form K-40 using Schedule S, Part B.
Does Missouri's capital gains exemption apply to Kansas property?
No. Kansas taxes gain on Kansas property whether the seller lives in Kansas or Missouri.
Sources
- Kansas Department of Revenue: 2026 individual estimated tax (rate schedules)
- Kansas Department of Revenue: 2025 income tax booklet
- Kansas Legislative Research Department: mortgage registration tax and statutory fees
- Missouri Department of Revenue: capital gains deduction notice
Related: Missouri, Nebraska, Oklahoma, Colorado, and all 50 states.
General information, not tax or legal advice. Check your own facts with a CPA or attorney before selling.
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