Mississippi taxes capital gains as ordinary income — up to 4% — stacked on top of federal tax, so selling appreciated real estate can cost roughly ~27.8% of the gain. A 1031 exchange into a Delaware Statutory Trust lets Mississippi investors defer that combined bill and trade active landlording for passive institutional real estate.
The Mississippi tax math
Here's the tax stack on a long-held rental sold for a $1.5M gain (excludes depreciation recapture, taxed separately at up to 25%):
| On a $1.5M gain | Tax |
|---|---|
| Federal long-term capital gains (20%) | $300,000 |
| Net investment income tax (3.8%) | $57,000 |
| Mississippi income tax (4%) | $60,000 |
| Total if you simply sell | $417,000 |
| Tax if you 1031 into a DST | $0 deferred |
In Mississippi's top bracket, roughly the combined rate above goes to tax if you sell outright — versus $0 now with a qualifying 1031 exchange. Run your Mississippi numbers →
Mississippi 1031 rules
Rules summarized as of 2026 — verify with your tax advisor.
Conforms to federal §1031
Mississippi conforms to IRC §1031, so a qualifying exchange defers Mississippi tax as well as federal tax.
Withholding at sale
Mississippi may require nonresident withholding at closing; a qualifying 1031 exchange generally defers it. Confirm specifics with your closing agent.
How gains are taxed
Taxed as ordinary income — up to 4%.
Mississippi market snapshot
Illustrative — wire to a market-data feed; refreshed quarterly.
Baker 1031 in Mississippi
Realized (acquired, held, sold) programs on Mississippi assets. Joined from full-cycle-deals.csv; sponsor-reported, net-to-investor, not independently verified; past performance ≠ future results.
| Program | Sponsor | Avg annual | Equity × | Hold |
|---|---|---|---|---|
| Hilton Garden Inn – Tupelo, MS — Tupelo | Peachtree Group | 21.80% | 2.09x | 8.43 yr |
| DoubleTree – Biloxi, MS — Biloxi | Peachtree Group | 11.10% | 2.19x | 8.11 yr |
| Comfort Suites – Starkville, MS — Starkville | Peachtree Group | 16.90% | 3.04x | 14.5 yr |
| Hampton Inn – Starkville, MS — Starkville | Peachtree Group | 16.90% | 3.04x | 14.5 yr |
See every Mississippi deal in the Data Center →
Current offerings for Mississippi investors
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Mississippi FAQ
What is the capital gains tax rate in Mississippi?
Mississippi taxes capital gains as ordinary income, up to 4%, with no separate long-term rate. Combined with the federal 20% rate and the 3.8% net investment income tax, a high-bracket Mississippi seller can face roughly ~27.8% on a real estate gain.
Does Mississippi recognize 1031 exchanges?
Yes. Mississippi conforms to IRC §1031, so a properly structured exchange defers Mississippi tax as well as federal tax.
Why use a 1031 exchange in Mississippi?
To defer the tax on a large gain (up to about ~27.8% combined) and move from active landlording into passive, professionally managed real estate while keeping your full equity invested. These are Regulation D offerings for accredited investors.
Disclosures
This page is educational and is not investment, tax, or legal advice, or an offer to sell or a solicitation to buy any security. State tax and 1031 rules summarized here are general, current as of 2026, and not tax advice — verify with your CPA and attorney. For accredited investors only. Representatives may transact business only in states where registered or exempt. Securities offered through Aurora Securities, Inc., member FINRA/SIPC; Baker 1031 Investments, LLC is independent of Aurora. Performance shown is sponsor-reported, realized programs only, net of fees, not independently verified, and not indicative of future results.