1031 tax exchange question in Portland, Oregon

[Matt Hilliard]

Hello Bigger Pockets family

My wife and I are selling a single-family rental property we’ve owned for 18 years in Portland Oregon. We want to do a 1031 exchange and buy a property outside of Oregon. We’re told by our accountant that we would be on the hook For up to $34,000 in taxes based on the fact that we 1031 exchanged into this property 18 years ago and all the depreciation recapture, etc.

Does anyone have any recommendations on strategies for limiting what Oregon will claim that we owe them after the sale of our property and successful 1031 exchange out of state?

Our proceeds from the sale will be around $150,000 that we will exchange into another property and State and we would have to come up with that $34,000 tax bill from somewhere out of our own pocket during the 2025 tax season

Any help/ tax strategies for avoiding some or are all of this would be much appreciated!

Matt

[Dave Foster]

@Matt Hilliard

Thanks for the shout @Bill B.! You would not have to pay state and federal tax or recapture any depreciation until you sold that property without a 1031 exchange. You can do as many exchanges as you want until you decide to cash out or simply die with the tax. At that time, your heirs get a step up in basis, so the tax dies with you.