Since January 1, 2025, Louisiana capital gains tax on real estate is a single flat 3%, after the state repealed its graduated brackets. On a large sale that is a modest state bill next to the federal tax, and a 1031 exchange in Louisiana defers both. The state also stands out for what it does not charge: the constitution bars any new tax on transfers of immovable property, leaving New Orleans' long-standing flat documentary fee as the lone exception.
Reviewed by Jon Hilley, CEO & Founder of 1031 Specialists. Last reviewed September 29, 2026.
| State tax on real estate gains | Flat 3% individual income tax (tax years 2025 and later). |
|---|---|
| Long-term capital gains treatment | Taxed as ordinary income at the same flat 3%; no general exclusion for investment real estate. |
| Nonresident withholding at closing | No general withholding on an individual's real estate sale. |
| Withholding form | None for individual sellers at closing. |
| Transfer or conveyance tax (a 1031 does not defer it) | No state transfer tax; new ones are banned by the constitution. New Orleans keeps a flat documentary transaction tax per transfer. |
| Clawback on out-of-state replacement property | No state tracking form. |
| Conforms to Section 1031 | Yes. Louisiana starts from federal adjusted gross income. |
Table of contents
- How much is capital gains tax on real estate in Louisiana?
- Louisiana tax on a $300,000 gain: worked example
- Nonresident withholding in Louisiana
- Louisiana transfer taxes: banned, with one exception
- Louisiana conformity and clawback
- Louisiana civil law: immovables, usufruct and mineral rights
- Insurance: the Louisiana replacement cost to check first
- Moving into or out of Louisiana
- Where 1031 exchanges happen in Louisiana
- Federal rules for a Louisiana exchange
- Louisiana-specific mistakes
- Start your Louisiana exchange
- Frequently asked questions
- Sources
How much is capital gains tax on real estate in Louisiana?
Three percent, flat. Louisiana's 2024 tax reform replaced the old brackets (1.85% to 4.25%) with a single 3% rate for tax years beginning January 1, 2025. The Louisiana Department of Revenue states that the graduated brackets and rates have been repealed, so the same rate applies to a $50,000 gain and a $5 million gain, for any filing status.
Louisiana taxes a real estate gain as ordinary income. There is no separate capital gains rate, no holding-period discount for rental property, and no lower state rate for depreciation recapture: the whole federal gain that flows into your Louisiana return is taxed at 3%. Parishes and cities do not levy income tax.
Nonresidents owe the same 3% on gain from Louisiana immovable property, because the gain is Louisiana-source income. Compare paying the tax with deferring it in our capital gains vs. 1031 exchange comparison.
Louisiana tax on a $300,000 gain: worked example
Assumptions: long-term gain of $300,000 on a Louisiana investment property, $100,000 of it unrecaptured §1250 depreciation, joint filers already in the top federal bracket. The flat rate makes the state line simple.
| Tax line | Amount |
|---|---|
| Unrecaptured §1250 gain: 25% of $100,000 | $25,000 |
| Long-term capital gain: 20% of $200,000 | $40,000 |
| Net investment income tax: 3.8% of $300,000 | $11,400 |
| Federal subtotal | $76,400 |
| Louisiana income tax: flat 3% of $300,000 | $9,000 |
| Total tax deferred by a full 1031 exchange | $85,400 |
A full exchange keeps $85,400 invested. Before the 2025 reform, the same seller would have faced a higher top Louisiana rate, so older estimates overstate the state piece. Model your recapture with the depreciation recapture calculator.
Nonresident withholding in Louisiana
Louisiana does not require the notary or title company to withhold state income tax from an individual seller's proceeds, so there is no exemption filing before a 1031 closing. Nonresident sellers file a Louisiana nonresident return for the year of a taxable sale and pay the 3% on the Louisiana gain. In an exchange, the gain is deferred on that return as well.
Foreign sellers face federal FIRPTA withholding at the act of sale; see our FIRPTA guide.
Louisiana transfer taxes: banned, with one exception
Article VII, Section 2.3 of the Louisiana Constitution prohibits the state or any local government from levying a new tax or fee on the sale or transfer of immovable property, including documentary transaction taxes, after November 30, 2011. Recordation fees, impact fees, parcel fees and ad valorem property taxes are outside the ban.
The legislature's fiscal note on the amendment identified New Orleans as the only jurisdiction already levying such a tax, a flat documentary transaction tax ($325 per transfer at the time), which was grandfathered. So an exchange in Baton Rouge, Lafayette or Shreveport carries no transfer tax, and one in Orleans Parish carries a flat fee rather than a percentage of price. Confirm the current New Orleans amount with your title company. Either way, a 1031 does not defer it.
Louisiana conformity and clawback
Louisiana computes income from federal adjusted gross income, so a valid Section 1031 exchange defers the Louisiana tax automatically. Louisiana does not track deferred gain after you exchange into another state; there is no equivalent of California's FTB 3840. If you are still a Louisiana resident when you later sell the replacement in a taxable sale, Louisiana taxes the gain then.
Louisiana civil law: immovables, usufruct and mineral rights
Louisiana property law follows the civil code, and the vocabulary shows up in exchanges. Real estate is "immovable property," a sale closes by an act of sale before a notary, and ownership is often split in ways other states rarely see.
- Usufruct and naked ownership. After a death, a surviving spouse often holds a usufruct while children hold naked ownership. Everyone with an interest must sign the sale, and each taxpayer's exchange is separate, so plan who is exchanging before listing.
- Ownership in indivision. Co-owners can exchange their own undivided shares separately; one can exchange while another cashes out.
- Mineral servitudes. Louisiana mineral rights can prescribe (lapse) for nonuse. Federal regulations say a state-law label does not decide whether an interest is real property for Section 1031, so review any mineral interest you plan to exchange with your tax advisor.
Insurance: the Louisiana replacement cost to check first
Property tax in Louisiana is modest, but wind and flood insurance can swing a replacement property's cash flow more than any tax line. Get binding quotes for the specific address, including flood zone and elevation data, before your 45-day identification deadline, and name backup properties in case coverage on your first choice is unavailable or priced out.
Moving into or out of Louisiana
Louisianans often exchange into Texas, where there is no income tax. Louisiana has no clawback, so once you are no longer a Louisiana resident, a later sale of the Texas property is outside Louisiana's reach. Property you keep in Louisiana remains taxable here as Louisiana-source income wherever you live.
Investors moving in from higher-tax states, including California, can buy Louisiana replacement property, but California still tracks the deferred California gain through annual FTB 3840 filings.
Where 1031 exchanges happen in Louisiana
New Orleans draws hospitality, short-term rental and small multifamily investors, along with historic properties in the city's older neighborhoods; see our guide to a 1031 exchange in New Orleans. Baton Rouge combines state government and petrochemical employers along the river. Lafayette anchors the Acadiana energy economy, and Shreveport-Bossier and the Northshore suburbs add single-family rentals and net-lease retail.
Federal rules for a Louisiana exchange
Name your replacement properties in writing within 45 days of the act of sale and close within 180 days. A qualified intermediary, not you or your notary, must hold the funds in between. Replace at least the value and the debt you gave up to defer the full federal gain. Our 1031 exchange guides go deeper, the 45-day identification validator checks your list, and the 1031 exchange calculator estimates what you keep invested.
Louisiana-specific mistakes
- Using pre-2025 rates. Old calculators still show brackets up to 4.25%. The rate is now a flat 3%.
- Ignoring usufruct holders. A missing usufructuary signature can delay the act of sale and push your 45-day clock.
- Letting the notary hold proceeds. Funds must go straight to your qualified intermediary.
- Identifying a property you cannot insure. Get quotes before day 45, not after.
- Budgeting a percentage transfer tax. Outside New Orleans there is none, and inside it is a flat fee.
Start your Louisiana exchange
Open your exchange with 1031 Specialists before the act of sale so your notary or title company wires proceeds to us. Start your exchange or schedule an intro call.
Frequently asked questions
What is the Louisiana capital gains tax rate on real estate?
Louisiana taxes gain as ordinary income at a flat 3% for tax years 2025 and later. Federal capital gains tax, the 3.8% net investment income tax and up to 25% on depreciation apply on top.
How can I avoid capital gains tax on real estate in Louisiana?
A 1031 exchange defers both the federal tax and Louisiana's 3% when you reinvest the proceeds in like-kind property through a qualified intermediary within the 45-day and 180-day deadlines.
Does Louisiana have a real estate transfer tax?
No statewide transfer tax, and the Louisiana Constitution bars new ones after November 30, 2011. New Orleans keeps a grandfathered flat documentary transaction tax per transfer.
Is there withholding when a nonresident sells Louisiana property?
Louisiana does not require withholding on an individual's real estate sale. Nonresidents report the gain on a Louisiana nonresident return, and a valid exchange defers it.
Does Louisiana follow federal 1031 rules?
Yes. Louisiana starts from federal adjusted gross income, so deferred gain stays deferred, and there is no clawback form for out-of-state replacement property.
Sources
- Louisiana Department of Revenue: income tax reform rates FAQ
- Louisiana Constitution, Article VII (Section 2.3)
- Louisiana Legislature: HB 135 (2011) fiscal note on transfer tax prohibition
- IRS: like-kind exchanges, real estate tax tips
Related: Texas, Mississippi, Arkansas, Florida, all 50 states.
This is general information, not tax or legal advice. As a qualified intermediary we do not give tax advice; confirm Louisiana treatment of your sale with a CPA or attorney.
