How Ohio and Cincinnati Tax a Gain on Investment Property
For 2026, Ohio taxes nonbusiness income above $26,050 at a flat 2.75 percent. Gain on real property is treated as business income instead when buying, renting, managing and selling the property are integral parts of a regular trade or business. Individuals deduct the first $250,000 of business income, and Ohio taxes the rest at 3 percent. Ohio starts from federal adjusted gross income and lists no Section 1031 adjustment, so gain you defer on your federal return generally carries through to Ohio.
Cincinnati adds its own 1.8 percent income tax. The city counts rental property as business activity, and residents engaged in business must file a city return whether or not tax is due. Under Ohio's municipal income tax law, an individual's net profit is the amount reported on federal Schedule C, E or F, so rental income on Schedule E is part of the city base. Ask your tax advisor how the city treats the sale itself before you close.
Sources: Ohio Revised Code 5747.02 (2026 rates); Ohio Revised Code 5747.01 (business income, Ohio AGI); City of Cincinnati: income taxes; Ohio Revised Code 718.01 (municipal net profit)
Closing in Hamilton County: Fees, Recording and the 2026 Value Update
When a Hamilton County deed is presented for transfer, the County Auditor collects a combined conveyance and permissive fee of $3.00 per $1,000 of the sale price, plus $0.50 for each parcel on the deed. Ohio law levies the county transfer tax on the seller. On a $750,000 sale of one parcel, that is $2,250.50. The deed is then recorded by the Hamilton County Recorder.
If you are buying replacement property in Hamilton County, note the timing of values. The county's last full reappraisal was in 2023, and 2026 is its triennial update year, so the value used for property tax on a building you buy now may change with the update.
Sources: Hamilton County Auditor: transfer fee calculator; Ohio Revised Code 322.02 (county transfer tax); Hamilton County Recorder; Hamilton County Auditor: reappraisal and updates
Working With 1031 Federal Exchange in Cincinnati
1031 Federal Exchange is led by attorney Steve Wolterman and is based in Loveland, Ohio. As your qualified intermediary, we prepare the exchange agreement before your sale closes, hold the sale proceeds so you never receive them, receive your signed 45-day identification, and send the funds to the closing of your replacement property. We work alongside your Cincinnati broker, lender and title company, and the replacement property can be anywhere in the United States.
Cincinnati, OH 1031 Exchange Questions
Does Ohio tax my gain if I live outside Ohio and sell Cincinnati property?
For nonbusiness income, Ohio law allocates capital gains from selling real property to Ohio when the property is physically located in Ohio, so a nonresident seller generally owes Ohio tax on a taxable sale of Cincinnati property. A 1031 exchange defers that Ohio tax along with the federal tax.
How much is the Hamilton County conveyance fee on a sale?
The Hamilton County Auditor charges $3.00 per $1,000 of the sale price plus $0.50 per parcel on the deed, paid when the deed is presented for transfer. Ohio law levies the county transfer tax on the seller.
State tax facts on this page were checked against official Cincinnati, OH sources in November 2026. Tax rules change, and this page is general information, not tax advice for your situation. Confirm the details with your tax advisor before you sell.
Ready to plan a 1031 exchange on your Cincinnati investment property? Contact 1031 Federal Exchange today.