Our Role in a Northern Kentucky Exchange
As qualified intermediary, 1031 Federal Exchange signs the exchange agreement with you before the sale, holds the proceeds, receives your identification by Day 45, and funds the replacement closing by Day 180. We coordinate with your title company in whichever county the property sits, and with the closing on the replacement side if it is across the river in Ohio or anywhere else in the country.
Three Counties, Three Sets of Local Rules
Boone County's net profit instructions say individuals who receive income from renting real property in Boone County must file a net profit return, and the return includes gains from federal Form 4797 or Form 6252 for property used in a trade or business. Kenton County exempted business entities from the county portion of its net profit tax for tax years ending on or after January 1, 2024, but entities must still file, and city taxes apply where cities levy them. Campbell County says operating rental property requires an occupational license, and businesses there may need both a county and a city license.
In all three counties, the deed is recorded by the county clerk where the property sits, and that clerk collects Kentucky's transfer tax of $0.50 per $500 of value, paid by the seller, before recording.
Sources: Boone County: net profit license tax instructions (2024); Kenton County: occupational license rates; Campbell County Fiscal Court: occupational license FAQ; KRS 382.110 (where deeds are recorded); KRS 142.050 (Kentucky real estate transfer tax)
Kentucky Income Tax for Northern Kentucky Sellers
Kentucky's flat income tax rate is 3.5 percent for 2026, down from 4 percent, and it applies to capital gains the same as other income. Kentucky starts from federal gross income, follows the Internal Revenue Code as of December 31, 2025 and makes no Section 1031 adjustment, so gain you defer federally generally stays deferred for Kentucky as well.
Sources: KRS 141.020 (Kentucky income tax rate); KRS 141.010 (Kentucky IRC conformity); KRS 141.019 (Kentucky adjusted gross income)
Northern Kentucky, KY 1031 Exchange Questions
Do I need a local license to own rental property in Northern Kentucky?
Often, yes. Campbell County says operating rental property requires an occupational license. Boone County requires individuals with rental income from Boone County property to file a net profit return. Kenton County entities are exempt from the county portion of the net profit tax but must still file.
Does Kentucky follow the federal 1031 exchange rules?
Kentucky begins with federal gross income, follows the Internal Revenue Code as of December 31, 2025 and lists no Section 1031 adjustment, so a gain deferred on your federal return generally stays deferred for Kentucky. Your tax advisor should confirm this for your return.
State tax facts on this page were checked against official Northern Kentucky, KY 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 Northern Kentucky investment property? Contact 1031 Federal Exchange today.