A 1031 exchange in Missouri lets you sell investment real estate and reinvest in like-kind property while deferring the tax on the gain. The federal rules apply the same way everywhere. Missouri is a special case as of 2025: it became the first state to exempt individuals from state capital gains tax, which changes what a 1031 actually does for an individual investor here. We act as your qualified intermediary, holding the proceeds and handling the documentation so the exchange holds from sale to closing.
Table of contents
- Missouri now exempts individuals' capital gains
- What this means for a Missouri 1031
- Missouri 1031 exchange rules and timeline
- 1031 exchanges across Missouri markets
- Common Missouri 1031 exchange mistakes
- Start your Missouri 1031 exchange
- Frequently asked questions
Missouri now exempts individuals' capital gains
Under House Bill 594, signed in 2025, Missouri allows individuals to deduct 100% of the capital gains they report for federal purposes when calculating their Missouri income, covering both short-term and long-term gains. The deduction also reaches pass-through entities such as partnerships and S-corporations. The result is that an individual selling appreciated property in Missouri now owes no Missouri capital gains tax on the sale. Missouri is the only income-tax state to go this far. C-corporations are not yet covered: their 100% deduction is set to take effect only after Missouri's top individual income tax rate falls to 4.5% or lower, which had not happened as of the 2026 tax year, so a C-corporation still faces Missouri tax on a gain. Confirm the current treatment for your situation with your tax advisor, since the rules are new and the corporate trigger depends on future rate changes.
What this means for a Missouri 1031
For an individual or pass-through investor, the practical picture has flipped. Because Missouri no longer taxes your capital gain, the only tax a Missouri 1031 defers is federal, much like an exchange in a no-income-tax state:
- Long-term capital gains at 0%, 15%, or 20%, with the 20% rate applying above $545,500 of taxable income for single filers and $613,700 for married couples filing jointly in 2026.
- The 3.8% Net Investment Income Tax above $200,000 of modified adjusted gross income for single filers, $250,000 for married couples.
- Depreciation recapture, taxed as unrecaptured Section 1250 gain at up to 25%.
That federal exposure is still substantial, so the exchange remains well worth doing. For a C-corporation that still owes Missouri tax, the 1031 also continues to defer the Missouri portion, and Missouri conforms to Section 1031, so the deferral works at the state level. The full federal framework is in our main 1031 exchange guide.
Missouri 1031 exchange rules and timeline
The federal deadlines govern, and they are strict:
- 45-day identification. Identify replacement property in writing within 45 days of the sale.
- 180-day closing. Close within 180 days of the sale, or by your return due date including extensions, whichever is earlier.
- No constructive receipt. Proceeds go to your qualified intermediary, never to you.
- Equal or greater value and debt. Reinvest all net proceeds and match or exceed the relinquished value and debt, or the shortfall is taxable boot.
- Same taxpayer. The entity that sold must be the entity that buys.
Missouri does not impose a general nonresident real estate withholding, so closings here are straightforward.
1031 exchanges across Missouri markets
Missouri's exchange activity centers on its two big metros. St. Louis carries multifamily, industrial, and commercial property and a deep logistics base along the Mississippi and Missouri rivers. Kansas City, on the Missouri side, is a major rail and distribution hub with one of the largest industrial and warehouse markets in the middle of the country, and the new capital gains exemption has drawn attention from investors and families on the Kansas side of the line considering a move across to Missouri. Springfield and Columbia add commercial and multifamily demand at lower entry prices, and Missouri's farmland markets remain active. Missouri property tax is moderate and set locally, so confirm the rate for any replacement deal.
Common Missouri 1031 exchange mistakes
- Assuming the exchange is unnecessary now that the state tax is gone for individuals, when the federal deferral alone is usually well worth it.
- For C-corporations, overlooking that Missouri still taxes the gain until the rate trigger is met, so the state deferral still matters.
- Taking receipt of the proceeds, or missing the 45-day identification window.
- Trading down or pulling cash out, which creates taxable boot.
Start your Missouri 1031 exchange
Set up your exchange before your relinquished property closes, so the proceeds never reach your hands and the 45-day and 180-day clocks start clean. Contact our team to begin, or to talk through a specific deal.
Frequently asked questions
Does Missouri tax capital gains on real estate?
As of 2025, individuals and pass-through entities can deduct 100% of capital gains, so an individual owes no Missouri capital gains tax on a sale. C-corporations are not yet covered and still owe Missouri tax on the gain.
Is a 1031 exchange still worth it in Missouri?
Yes. Even though individuals no longer owe Missouri tax on the gain, the federal capital gains tax, Net Investment Income Tax, and depreciation recapture still apply, and a 1031 defers all of those.
Is there nonresident withholding when I sell Missouri property?
No. Missouri does not impose a general nonresident real estate withholding at closing.
Do I need a qualified intermediary for a Missouri 1031 exchange?
Yes. The intermediary must hold the proceeds and facilitate the exchange. Engage one before the relinquished property closes.
This page is general information, not tax or legal advice. We act as a qualified intermediary and do not provide tax or legal advice. State and federal rules and thresholds change, and Missouri's capital gains exemption is new; confirm current figures and treatment with your tax advisor.
