Oregon capital gains tax on real estate is ordinary income tax, reaching 9.9% on joint taxable income above $250,000 in 2026, and Portland-area residents can owe up to 4% more in Metro and Multnomah County income taxes. A 1031 exchange in Oregon defers the federal and state tax alike, but Oregon keeps a claim on the deferred gain: exchange into another state and you file Schedule OR-24 every year until you sell.
Reviewed by Jon Hilley, CEO & Founder of 1031 Specialists. Last reviewed September 29, 2026.
| State tax on real estate gains | Taxed as ordinary income: 4.75% to 9.9% |
|---|---|
| Long-term capital gains treatment | No preferential rate for real estate. 9.9% applies above $125,000 single / $250,000 joint (2026) |
| Nonresident withholding at closing | Lesser of 4% of the price, 8% of the Oregon gain, or net proceeds |
| Withholding form | Form OR-18-WC, completed with the escrow agent |
| Transfer or conveyance tax (a 1031 does not defer it) | None statewide. Washington County only: $1 per $1,000 of price |
| Clawback on out-of-state replacement property | Yes. Schedule OR-24 filed the year of the exchange and every year until the replacement is sold |
| Conforms to Section 1031 | Yes, but Oregon disallows federal bonus depreciation for 2026 and later |
| Local income tax | Metro SHS 1% and Multnomah County PFA 1.5% to 3% on high incomes |
Table of contents
- How much is capital gains tax on real estate in Oregon?
- Oregon tax on a $300,000 gain: worked example
- Oregon nonresident withholding and the OR-18-WC exemption
- Oregon transfer taxes: Washington County only
- The Oregon clawback: Schedule OR-24
- Portland-area income taxes on a taxable sale
- Oregon's 2026 bonus depreciation disconnect and replacement property
- Moving into or out of Oregon
- Where Oregon 1031 exchanges happen
- Federal 1031 rules that apply in Oregon
- Common Oregon 1031 exchange mistakes
- Start your Oregon 1031 exchange
- Frequently asked questions
- Sources
How much is capital gains tax on real estate in Oregon?
Oregon does not have a separate capital gains tax. A gain on investment real estate is added to your Oregon taxable income and taxed at the regular rates. For 2026 the Department of Revenue's rate charts are:
- Single: 4.75% up to $4,550; 6.75% to $11,400; 8.75% to $125,000; 9.9% above $125,000.
- Joint: 4.75% up to $9,100; 6.75% to $22,800; 8.75% to $250,000; 9.9% above $250,000.
Because the top bracket starts so low, almost any meaningful property gain lands at 9.9%. Depreciation recapture gets no special treatment either: the unrecaptured §1250 gain that the IRS caps at 25% is simply more Oregon income at 9.9%. Oregon has a reduced rate for certain farm capital gains, but it does not apply to rentals or commercial property.
On top of the state tax, residents of the Metro district and Multnomah County pay local income taxes on high incomes (covered below). Federal tax adds 20% on long-term gain above $613,700 of joint taxable income in 2026 ($545,500 single), up to 25% on recapture, and the 3.8% net investment income tax above $250,000 joint MAGI ($200,000 single).
Oregon tax on a $300,000 gain: worked example
Assumptions: a $300,000 long-term gain on an Oregon investment property, $100,000 of it unrecaptured §1250 depreciation, a married couple filing jointly already in the top federal and top Oregon brackets. Oregon taxes the whole $300,000, recapture included, at 9.9%.
| Line | Math | Tax |
|---|---|---|
| Unrecaptured §1250 gain (federal) | 25% x $100,000 | $25,000 |
| Long-term capital gain (federal) | 20% x $200,000 | $40,000 |
| Net investment income tax | 3.8% x $300,000 | $11,400 |
| Federal subtotal | $76,400 | |
| Oregon income tax | 9.9% x $300,000 | $29,700 |
| Total deferred by a full 1031 exchange | $106,100 |
If you live in Multnomah County with income above the top thresholds, add roughly $12,000 more ($3,000 Metro SHS at 1% and $9,000 PFA at 3%), for about $118,100. That local line depends on where you live, not where the property is. Model your own recapture with the depreciation recapture calculator, and compare selling outright against exchanging in our capital gains vs. 1031 comparison.
Oregon nonresident withholding and the OR-18-WC exemption
When a nonresident sells Oregon real property, the escrow agent must withhold the least of three amounts: 4% of the consideration, 8% of the gain includable in Oregon taxable income, or the net proceeds ("cash to seller"). The computation is done on Form OR-18-WC. It is a prepayment toward your Oregon tax, not an extra tax, but on a $1,200,000 sale 4% is $48,000 that would otherwise go to your intermediary.
How a 1031 exchange gets to zero. OR-18-WC has a line for "excludable gain from nonrecognition section under federal law," where you enter the Code section (1031) and the deferred gain. With the whole gain excluded, 8% of the includable gain is $0, so nothing is withheld. Give escrow your exchange agreement and the completed form before closing; if the form is blank on closing day, escrow defaults to withholding and you recover it only when you file.
Other ways out of withholding listed on the form:
- You are an Oregon resident (residents are exempt transferors).
- The total price is $100,000 or less, or the tax to withhold is under $100.
- You live in Arizona, California, Indiana or Virginia and expect zero Oregon tax because of the credit for taxes paid to your home state.
- Foreclosure, deed in lieu, court-supervised sales, and a personal residence fully excluded under Section 121.
You keep the completed OR-18-WC with your records rather than filing it. A nonresident with Oregon-source income above the filing threshold files Form OR-40-N, including in the year of an exchange. Foreign sellers face federal FIRPTA withholding as well; see FIRPTA for foreign sellers.
Oregon transfer taxes: Washington County only
Oregon is one of the cheaper states to sell in on transfer costs. ORS 306.815 bars cities, counties and districts from taxing the transfer of real property, but grandfathered any tax already in effect on March 31, 1997. Washington County's tax survived: $1 per $1,000 of the selling price (0.1%), with liability left to the buyer and seller to allocate in their contract.
On a $900,000 Beaverton rental that is $900. Selling in Portland (Multnomah County), Bend, Salem or Medford carries no transfer tax, only recording fees and escrow costs. As with every transfer tax, a 1031 does not defer the Washington County tax; it is due at closing. Oregon has no state real estate transfer tax.
The Oregon clawback: Schedule OR-24
Oregon starts from federal taxable income, so a valid federal exchange is also deferred for Oregon. The catch is what happens when the replacement property is outside Oregon. Oregon wants to tax the gain that built up while you owned Oregon property, even if you never own Oregon real estate again and move away.
The tool is Schedule OR-24, which reports exchanges of Oregon business or investment property for property outside Oregon under Section 1031 or 1033. The instructions require it for the tax year of the exchange "and annually thereafter until the disposition of the like-kind property." When you finally sell the replacement in a taxable sale, the deferred Oregon gain becomes taxable in Oregon, including for nonresidents.
Three practical points:
- File it every year, even when nothing happened to the property. Missing a year does not end the obligation.
- A second exchange does not reset the clock. Oregon's deferred gain rides into the next replacement property.
- Holding the replacement until death generally ends the income tax problem through the basis step-up, which is why many Oregon exchangers plan to swap till they drop. Oregon's estate tax, with a $1 million filing threshold, still applies.
Conformity has one new wrinkle. Senate Bill 1507 (2026 session) disconnects Oregon from federal bonus depreciation for 2026 and later tax years, so Oregon depreciation on newly acquired property can differ from the federal amount.
Portland-area income taxes on a taxable sale
Two local income taxes apply to high earners in the Portland area, and a capital gain in a taxable sale can push you over the thresholds even in a normal-income year.
- Metro Supportive Housing Services (SHS) tax: 1% of Metro taxable income above $125,000 single / $200,000 joint for 2025, indexed to $128,000 / $205,000 for 2026. It applies to residents of the Metro district in Multnomah, Washington and Clackamas counties.
- Multnomah County Preschool for All (PFA) tax: 1.5% above $125,000 single / $200,000 joint, plus another 1.5% above $250,000 / $400,000.
Both are administered by the City of Portland Revenue Division. Because they are income taxes that follow the state definition of taxable income, a fully deferred exchange generally keeps the gain off these returns too. Boot does not: cash you take out of the exchange is taxable at the federal, state and local level in the same year.
Oregon's 2026 bonus depreciation disconnect and replacement property
Many investors pair a 1031 purchase with a cost segregation study so they can take bonus depreciation on the new property's short-lived components. For federal purposes that still works. For Oregon, SB 1507 disallows bonus depreciation for tax years 2026 and later, so Oregon depreciation will be slower and your Oregon basis will differ from federal basis.
That matters twice: the first-year Oregon deduction is smaller than the federal one, and when you eventually sell, the Oregon gain is computed on the Oregon basis. Ask your preparer to keep a separate Oregon depreciation schedule for any replacement property bought in 2026 or later, and keep it alongside your OR-24 records if the property is out of state.
Moving into or out of Oregon
Leaving Oregon. The classic move is north or east: sell a Portland rental, exchange into property in Washington, Idaho or Nevada, and move there. The move does not end Oregon's claim. You file OR-24 each year, and when you sell the replacement in a taxable sale, Oregon taxes the deferred Oregon gain as Oregon-source income. Only the appreciation after the exchange belongs to your new state.
Selling Oregon property as a nonresident. The gain is Oregon-source regardless of where you live. Expect OR-18-WC at closing and an OR-40-N return. Residents of Arizona, California, Indiana and Virginia can skip withholding on the form if they expect zero Oregon tax after the credit for taxes paid to their home state.
Moving to Oregon. New residents are taxed on worldwide income, so a later taxable sale of property you already own elsewhere is taxed by Oregon at up to 9.9%. If you exchanged California property into Oregon, California's FTB 3840 tracking also follows you, and the two states' credit rules decide who collects.
Where Oregon 1031 exchanges happen
Portland and its suburbs produce most of the volume: older multifamily in the city trades into newer suburban or out-of-state property, and Washington County owners budget the county transfer tax. Central Oregon is the second hub; our page on the 1031 exchange in Bend covers the vacation rental and land market there. In southern Oregon, see the 1031 exchange in Medford for the Rogue Valley. Salem and Eugene see steady trades of student and workforce housing. For a broader overview, read our guidelines for 1031 exchanges in Oregon.
Federal 1031 rules that apply in Oregon
You have 45 days from the sale to name replacement property in writing and 180 days to close, or less if your return is due first. A qualified intermediary must hold the money the whole time. Buy equal or greater value and replace your paid-off debt, or the difference is taxable boot at federal and Oregon rates. See our 1031 exchange guides, test your list with the 45-day identification validator, and estimate the deferral with the 1031 exchange calculator.
Common Oregon 1031 exchange mistakes
- Letting escrow withhold 4% from a nonresident exchanger. Without a completed OR-18-WC showing the excluded gain, the default applies, and that cash cannot be used for the replacement purchase.
- Forgetting OR-24 after moving away. The filing obligation lasts until you dispose of the out-of-state replacement, and Oregon expects its tax on the deferred gain when you do.
- Treating boot as cheap. Boot is taxed at 9.9% in Oregon plus up to 4% in local taxes for Multnomah County residents, on top of federal tax.
- Using the federal depreciation schedule for Oregon. For replacement property placed in service in 2026 or later, Oregon disallows bonus depreciation, so the numbers must be tracked separately.
- Assuming a move to Washington erases the tax. Washington does not tax your later gains, but Oregon still taxes the part that accrued in Oregon.
Start your Oregon 1031 exchange
Open the exchange before closing so we can give escrow the assignment documents and support the OR-18-WC exclusion. We hold the proceeds, track your deadlines, and provide the exchange records your preparer needs for OR-24. Start your exchange or schedule an intro call with our team.
Frequently asked questions
How can I avoid capital gains tax on real estate in Oregon?
Oregon taxes real estate gains as ordinary income at up to 9.9%. A 1031 exchange into like-kind investment property defers the Oregon and federal tax. If the replacement is outside Oregon, you must file Schedule OR-24 each year, and Oregon taxes the deferred gain when you later sell in a taxable sale.
What is the Oregon capital gains tax rate on real estate in 2026?
Oregon has no separate capital gains rate. Gains are taxed as ordinary income, and the 9.9% top rate applies above $125,000 of taxable income for single filers and $250,000 for joint filers in 2026. Metro and Multnomah County residents may owe local income taxes as well.
How do I avoid Oregon nonresident withholding in a 1031 exchange?
The escrow agent withholds the least of 4% of the price, 8% of the Oregon gain, or net proceeds, computed on Form OR-18-WC. In an exchange, the deferred gain is entered as excludable gain under a federal nonrecognition section, which brings the includable gain and the withholding to zero. Complete the form with escrow before closing.
What is Oregon Schedule OR-24?
Schedule OR-24 reports an exchange of Oregon business or investment property for property outside Oregon. You file it for the year of the exchange and every year after until you dispose of the replacement property, so Oregon can tax the deferred Oregon gain when it is recognized.
Does Oregon have a real estate transfer tax?
Not statewide. ORS 306.815 bans local transfer taxes except those in effect in 1997, which leaves Washington County's tax of $1 per $1,000 of the selling price. A 1031 exchange does not defer it.
Do Portland-area income taxes apply to a property sale?
They can. The Metro SHS tax is 1% above $128,000 single or $205,000 joint for 2026, and Multnomah County's Preschool for All tax is 1.5% above $125,000 or $200,000, plus 1.5% above $250,000 or $400,000. They apply based on where you live, and a taxable gain counts toward the thresholds.
Sources
- Oregon Department of Revenue: 2026 estimated tax instructions and rate charts
- Form OR-18-WC: Real property withholding computation
- Publication OR-NR-REAL: Nonresident real property sales
- Schedule OR-24 instructions: Like-kind exchanges
- ORS chapter 306 (ORS 306.815 transfer tax prohibition)
- Washington County, Oregon: Transfer tax
- City of Portland Revenue Division: Metro SHS and Multnomah County PFA taxes
- Oregon Department of Revenue: 2026 summary of legislation
- Oregon Department of Revenue: Estate transfer tax
Related: Washington, California, Idaho, Nevada, and all 50 states.
General information about Oregon and federal tax rules, not tax or legal advice. Your exchange should be reviewed by your own CPA or attorney.
