Calculators
1031 Exchange Calculator
Estimate the capital gains and depreciation recapture tax a US 1031 exchange defers, and the tax due on any boot received.
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What people use it for
- Deciding whether to exchange or sell
- Estimating tax on boot
- Planning replacement property purchases
- Explaining 1031 benefits to clients
About this tool
What the 1031 Exchange Calculator does
A Section 1031 like-kind exchange lets US real estate investors defer capital gains and depreciation recapture tax by reinvesting sale proceeds in another investment property. Any cash or debt relief received, called boot, is taxable. This calculator estimates the tax deferred and the tax on boot.
Formula
- Gain = sale price − selling costs − adjusted basis
- Recapture portion = lesser of gain and depreciation taken
- Tax without exchange = recapture × recapture rates + remaining gain × capital gains rates
- Boot is taxed, recapture first
Worked example
Using the starting values in the calculator above:
| Input | Value |
|---|---|
| Sale price | $1,000,000 |
| Adjusted basis | $450,000 |
| Selling costs | $60,000 |
| Depreciation taken | $150,000 |
| Federal capital gains rate | 15% |
| Recapture rate (unrecaptured §1250) | 25% |
| State tax rate | 5% |
| Net investment income tax | 3.8% |
| Boot received (cash or debt relief) | $0.00 |
| Result | Value |
|---|---|
| Tax deferred by the exchange | $131,620 |
| Tax if sold without an exchange | $131,620 |
| Tax due on boot | $0.00 |
| Total gain | $490,000 |
| Net sale proceeds to reinvest | $940,000 |
How to read the result
To defer all tax, buy replacement property of equal or greater value and reinvest all net proceeds, replacing any debt paid off with new debt or cash.
The deferred gain carries into the new property’s basis; it is postponed, not forgiven, unless the property is held until death.
Not tax advice. 1031 exchanges have strict rules; work with a qualified intermediary and tax adviser.
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Questions
Questions about this tool
The things clients actually want to know — costs, timelines, ownership and what happens after launch.
A US tax rule allowing investors to defer tax on the sale of investment real estate by reinvesting in like-kind property.
Cash or other non-like-kind value, including debt relief, received in the exchange. It is taxable.
Replacement property must be identified within 45 days of the sale and acquired within 180 days.
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