Wisconsin capital gains tax on real estate comes with a built-in discount: you exclude 30% of a net long-term gain (60% for farm assets) and pay regular income tax rates, topping out at 7.65%, on the rest. That puts the effective top rate on a long-held rental near 5.4%. A 1031 exchange in Wisconsin defers that tax and the federal tax, while the 0.3% real estate transfer fee is still due when the deed is recorded.
Reviewed by Jon Hilley, CEO & Founder of 1031 Specialists. Last reviewed September 29, 2026.
| State tax on real estate gains | Ordinary rates of 3.5%, 4.4%, 5.3% and 7.65% on the taxable part of the gain |
|---|---|
| Long-term capital gains treatment | Exclude 30% of net long-term capital gain; 60% for farm assets |
| Nonresident withholding at closing | None for individual sellers |
| Withholding form | None required at closing |
| Transfer or conveyance tax (a 1031 does not defer it) | Real estate transfer fee of $0.30 per $100 of value (0.3%), reported on the electronic transfer return |
| Clawback on out-of-state replacement property | No |
| Conforms to Section 1031 | Yes |
| Local income tax | None |
Table of contents
- How much is capital gains tax on real estate in Wisconsin?
- Wisconsin tax on a $300,000 gain: worked example
- Farmland exchanges and the 60% exclusion
- Wisconsin nonresident withholding: none at closing
- Wisconsin real estate transfer fee: what a 1031 does not defer
- Wisconsin conformity and clawback rules
- Moving into or out of Wisconsin
- Where 1031 exchanges happen in Wisconsin
- Federal 1031 rules in brief
- Common Wisconsin 1031 exchange mistakes
- Start your Wisconsin 1031 exchange
- Frequently asked questions
- Sources
How much is capital gains tax on real estate in Wisconsin?
Wisconsin taxes capital gains as income, with a twist. The Department of Revenue’s Schedule WD lets you exclude 30% of the net capital gain from assets held more than one year, or 60% for farm assets. Only 70% (or 40%) of the gain enters Wisconsin taxable income, where it is taxed at your regular rate.
The 2025 rate schedule, which the 2025 to 2027 budget reshaped by widening the 4.4% bracket, is:
| Rate | Single | Married filing jointly |
|---|---|---|
| 3.50% | $0 to $14,679 | $0 to $19,579 |
| 4.40% | $14,680 to $50,479 | $19,580 to $67,299 |
| 5.30% | $50,480 to $323,289 | $67,300 to $431,059 |
| 7.65% | $323,290 and up | $431,060 and up |
Thresholds are indexed, so 2026 figures run slightly higher. Most sellers of a sizable rental property land in the 7.65% bracket for part of the gain. The exclusion applies to the long-term capital gain on Schedule WD, which includes the unrecaptured §1250 portion; ordinary §1245 recapture on personal property is not a capital gain and gets no exclusion. For the federal side, use our depreciation recapture calculator.
Wisconsin tax on a $300,000 gain: worked example
Assumptions: a $300,000 long-term gain on an investment property (not farm property), $100,000 of it unrecaptured §1250 depreciation, a married couple filing jointly already in the top federal and top Wisconsin brackets.
| Line | Math | Tax |
|---|---|---|
| Federal unrecaptured §1250 gain | 25% × $100,000 | $25,000 |
| Federal long-term capital gain | 20% × $200,000 | $40,000 |
| Net investment income tax | 3.8% × $300,000 | $11,400 |
| Federal subtotal | $76,400 | |
| Wisconsin 30% exclusion | $300,000 × 30% = $90,000 excluded | |
| Wisconsin income tax | 7.65% × $210,000 | $16,065 |
| Total deferred by a full 1031 | $92,465 |
That is an effective Wisconsin rate of about 5.4% on the full gain. If the property were qualifying farm assets, the taxable portion would be $120,000 and the Wisconsin line about $9,180. Compare outcomes in the capital gains vs. 1031 exchange comparison.
Farmland exchanges and the 60% exclusion
Wisconsin farms are frequent exchange property: a retiring owner sells cropland near Madison, Green Bay or the Fox Valley at development prices and trades into a larger farm up north, a net-leased building or a Delaware statutory trust. Two points matter. First, the 60% farm exclusion already lowers the Wisconsin cost of selling outright, so the state share of your savings is smaller than for commercial property; the federal tax is still the big number. Second, a farm sale often mixes land, buildings, equipment and the home. Only the real estate held for investment or business use qualifies for a 1031; equipment and the farmhouse you live in are handled separately, so get the allocation right in the purchase agreement.
Wisconsin nonresident withholding: none at closing
Wisconsin does not require the buyer or title company to withhold state income tax when an individual nonresident sells Wisconsin real estate. The gain is still taxable: Wisconsin’s instructions list gain from the sale of land and buildings located in Wisconsin as Wisconsin-source income for nonresidents, who report it on a Wisconsin nonresident return and can use the same 30% exclusion.
Foreign owners should plan for federal FIRPTA withholding; see foreigners selling US property.
Wisconsin real estate transfer fee: what a 1031 does not defer
Wisconsin charges a real estate transfer fee of $0.30 for each $100 of value, or 0.3%, reported on the electronic real estate transfer return filed before the deed is recorded. The fee is customarily the seller’s cost. Counties keep 20% and the state 80%.
On an $800,000 sale the fee is $2,400. Because it is a transfer fee rather than an income tax, a 1031 exchange does not defer it. It is paid at closing and treated as a selling expense. Wisconsin has no separate county or city transfer tax on top of it.
Wisconsin conformity and clawback rules
Wisconsin follows Section 1031, so gain deferred federally is deferred for Wisconsin. It has no clawback: a Wisconsin resident who exchanges into property in another state is not required to file annual reports, and Wisconsin does not tax the deferred gain if you sell after becoming a nonresident. When you sell as a resident, the whole deferred gain is taxed then, still with the 30% exclusion for long-term gain.
Moving into or out of Wisconsin
Residents pay Wisconsin tax on all income; nonresidents pay only on Wisconsin-source income such as gain on Wisconsin land and buildings. Many Wisconsin retirees exchange into property in Florida or Arizona and change residence, and because there is no clawback, a later sale as a nonresident escapes Wisconsin tax. Investors in Hudson and River Falls often trade across the St. Croix into Minnesota, where rates are higher, and Kenosha-area investors into Illinois. If you move to Wisconsin with a replacement property from a clawback state such as California, that state may still tax its deferred gain.
Where 1031 exchanges happen in Wisconsin
Milwaukee and its suburbs in Waukesha and Ozaukee counties drive the most volume: industrial near the I-94 corridor, multifamily and retail. Madison, with state government and the university, has tight apartment vacancy and strong demand for newer multifamily. Green Bay and the Fox Valley trade industrial and net-lease retail, and western Wisconsin around Eau Claire and Hudson benefits from the Twin Cities. Northern lake country sees vacation rental exchanges, which must show real rental use to qualify.
Federal 1031 rules in brief
Identify replacement property in writing within 45 days of your sale and close within 180 days (or by your return due date with extensions, if earlier). A qualified intermediary must hold the proceeds from closing to closing. To defer all of the tax, buy replacement property of equal or greater value and replace the debt you pay off, with new debt or added cash. Our 1031 exchange guides cover the details, the 45-day identification validator checks your list, and the boot calculator shows what a partial exchange costs.
Common Wisconsin 1031 exchange mistakes
- Overstating the state tax. Forgetting the 30% exclusion makes Wisconsin tax look like 7.65% of the gain instead of about 5.4%.
- Exchanging the farmhouse with the farm. Your residence and farm equipment do not qualify; allocate the price before closing.
- Counting on the farm exclusion for rented land you never farmed. The 60% rate applies to farm assets as Wisconsin defines them; confirm eligibility with your CPA.
- Treating a lake cabin as investment property. A family cabin rented a few weeks a year may not qualify; see does my property qualify.
- Forgetting the transfer fee in reinvestment math. The 0.3% fee leaves the closing either way.
Start your Wisconsin 1031 exchange
Engage us before closing so your title company sends proceeds to our qualified intermediary account and never to you. Start your exchange online, book an intro call, or call (631) 438-1031.
Frequently asked questions
How much is capital gains tax on real estate in Wisconsin?
Wisconsin excludes 30% of a net long-term capital gain (60% for farm assets) and taxes the rest at regular rates of 3.5% to 7.65%. For a seller in the top bracket, that is about 5.4% of the gain, plus federal tax.
How can I avoid capital gains tax on real estate in Wisconsin?
A 1031 exchange defers Wisconsin and federal tax on investment or business real estate if you reinvest all proceeds in like-kind property through a qualified intermediary within the 45 and 180-day deadlines. Holding until death for a stepped-up basis is another option.
Does Wisconsin withhold tax when a nonresident sells property?
No. Wisconsin has no closing withholding for individual nonresident sellers. Gain on Wisconsin land and buildings is still Wisconsin-source income, so a nonresident files a Wisconsin return if the sale is taxable.
What is the Wisconsin real estate transfer fee, and does a 1031 defer it?
The fee is $0.30 per $100 of value, or 0.3%, and is customarily paid by the seller. A 1031 exchange does not defer it.
Does the Wisconsin capital gains exclusion apply to farmland?
Yes. Farm assets held more than one year get a 60% exclusion instead of 30%, so only 40% of the gain is taxed by Wisconsin.
Does Wisconsin tax deferred gain if I exchange into another state?
No. Wisconsin has no clawback rule, so a later sale of out-of-state replacement property by a nonresident is not taxed by Wisconsin.
Sources
- Wisconsin DOR: 2025 tax update and rate schedule
- Wisconsin DOR: Schedule WD instructions (capital gain exclusion)
- Wisconsin DOR: real estate transfer fee report
Related: Minnesota, Illinois, Michigan, Iowa and all 50 states.
This page is general information, not tax or legal advice. Confirm current Wisconsin rates and your eligibility for the capital gain exclusion with a tax professional.
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