Rental Property Taxes in North Dakota (2026 Guide)

1. Property Tax: the 4.5% Taxable Base

North Dakota property tax is locally assessed and levied by mill rate, but the taxable base is built the same way everywhere. Residential property is first assessed at 50% of its true and full value (NDCC 57-02-01(3)), and then a 9% residential taxable ratio is applied to that assessed value (NDCC 57-02-27):

• Market value × 50% = assessed value, then assessed value × 9% = taxable value — so a rental is taxed on just 4.5% of its market value.
• Local mill levies are applied to that taxable value, producing an effective rate that typically runs around 0.9–1.0% of market value, varying by county and city.

2. Income Tax (Among the Lowest in the Country)

North Dakota has among the lowest income taxes in the country. The 2023 reform (NDCC 57-38-30.3) put individuals on a flat-feeling three-rate schedule:

• 0% on the first band of taxable income, 1.95% on the middle band, and a 2.50% top rate on the highest band — the top marginal rate is just 2.50%.
• Federal taxable income is the starting point (NDCC 57-38-30.3), so an accurate federal Schedule E flows straight through to your ND return.

3. The 40% Long-Term Capital-Gains Deduction

This is a meaningful break when you sell. North Dakota lets individuals deduct 40% of net long-term capital gains — the excess of net long-term capital gain over net short-term capital loss, computed under the Internal Revenue Code — directly from North Dakota taxable income (NDCC 57-38-30.3(1)(d)(1)).

The statute applies to net long-term capital gain generally, with no carve-out for real estate, so a rental property held more than one year qualifies on sale. Only 60% of the long-term gain is taxed by North Dakota, which on the 2.50% top rate works out to an effective top state rate of about 1.50% (2.50% × 0.60) on the long-term gain. (The portion of gain that is depreciation recapture taxed as ordinary income at the federal level is not a long-term capital gain, so it is not eligible for the 40% deduction.)

4. Bonus Depreciation (Full Conformity)

North Dakota conforms to federal bonus depreciation (IRC 168(k)). Because the ND individual income tax starts from federal taxable income (NDCC 57-38-30.3) and the state has no 168(k) add-back, the federal bonus deduction flows through to North Dakota with no adjustment. You do not keep a separate ND depreciation schedule for bonus — what you claim federally is what reduces your ND base.

5. No Real-Estate Transfer Tax

North Dakota imposes no real-estate transfer tax, deed tax, or documentary conveyance tax. The only cost to record a deed is a flat county recording fee (NDCC 11-18-05 — $20 for documents of one to six pages, $65 for more) that is tied to page count, not sale price. Buying or selling a rental in ND carries no percentage transfer cost.

6. LLC Annual Report ($50)

A North Dakota LLC files an annual report with the Secretary of State and pays a $50 fee. For a standard business or professional LLC the report is due November 15 each year (farming/ranching LLCs file by April 15). It is an inexpensive, predictable annual cost for holding rentals in an LLC.

7. Rent Control

North Dakota prohibits local rent control statewide (NDCC 47-16-02.1, “Rent controls - Prohibited”). No political subdivision may enact, maintain, or enforce an ordinance that controls the amount of rent charged for private residential or commercial property. You set rents at market.

8. Security Deposit Rules

• One month’s rent cap on the security deposit (NDCC 47-16-07.1). It rises to two months’ rent when renting to an individual convicted of a felony, or to one who has had a judgment for violating a prior rental agreement.
• Pet deposit (for a non-service, non-companion animal) may not exceed the greater of $2,500 or two months’ rent.
• Hold it in a federally insured interest-bearing account for the tenant; interest is owed unless occupancy was under nine months.
• Return within 30 days of lease termination and delivery of possession, with a written itemized statement of any deductions. Withholding without reasonable justification exposes the landlord to treble damages.

9. How SheltrIQ Helps North Dakota Landlords

North Dakota is a low-tax state for landlords, but the breaks only help if your return claims them correctly — SheltrIQ keeps the math current:

• Low-rate income modeling — applies the 0%/1.95%/2.50% schedule from a federal-taxable-income base, so your small ND liability is computed exactly.
• Disposition modeling — applies the 40% long-term capital-gains deduction to a qualifying rental sale (taxing only 60% of the long-term gain) while keeping depreciation recapture out of it.
• Bonus-depreciation conformity — flows your federal 168(k) deduction straight through, with no ND add-back to track.
• AI Schedule E classification — sorts each expense to the right line so your North Dakota income starts from an accurate federal return.