Tennessee Excise Tax on Property Sale Gains in a 1031 Exchange

[Peter Schiff]

When a Tennessee property, owned by an LLC, is sold with gains and simultaneously exchanged for another property (in a different state) under a 1031 exchange, is the Tennessee excise tax deferred, or is it due at the time of the sale?

[Tenzapa Wakombe]

In Tennessee, the excise tax is due in the year of the sale—even if you defer the gain federally through a 1031 exchange. The state doesn’t follow federal deferral rules for excise tax purposes, so the gain is included in your TN taxable income when the property is sold. I’d definitely recommend checking with a TN CPA to plan accordingly.