1031 Exchange Calculator
Size the tax a like-kind exchange defers, test whether you trade up enough in both value and debt to avoid boot, and see the deferred gain riding inside your new basis.
1031 Exchange Calculator
Results recalculate instantly on every keystroke. Nothing you type is transmitted.
What this result does not account for
- Federal treatment only; several states impose clawback reporting.
- Reverse and improvement exchanges follow different mechanics.
- Assumes the property qualifies as held for investment — flips do not.
In short: Boot is the whole game. Trading 1,183,900.07 of net proceeds into a 1,100,000 property with less debt creates 146,300 of boot and recognises tax immediately — you must trade up in VALUE and in DEBT.
Formula
realized gain = net proceeds − (basis − depreciation)
recognised = min(boot, realized gain); boot = cash + debt relief
[('adjusted basis', 'original basis less depreciation taken'), ('cash boot', 'proceeds not reinvested'), ('mortgage boot', 'debt relieved and not replaced'), ('carryover basis', 'replacement price less deferred gain')]
Worked Example
- Compute the realized gain against your adjusted basis.
- Price the tax that would fall due on an outright sale.
- Test the replacement price against net proceeds — cash boot.
- Test new debt against old debt — mortgage boot.
- Recognise the lesser of total boot and the realized gain.
A 1,275,000 sale with 91,099.93 of costs nets 1,183,900.07. Against a 1,063,400 basis less 308,063.76 of depreciation — an adjusted basis of 755,336.24 — the realized gain is 428,563.83. Outright, that costs 77,015.94 of recapture, 24,100.01 at 20% and 16,285.42 of NIIT: 117,401.37, a blended 27.3949%. Trading into a 1,300,000 property with 750,000 of debt creates no boot, so the whole 117,401.37 is deferred — but the carryover basis is only 871,436.17, so you depreciate far less than the 1,300,000 you paid.
Strengths & Limits Of This Model
Where this engine is strong
- Separates cash boot from mortgage boot and explains both
- Prices the smaller depreciation the carryover basis produces
- States that the deadlines run concurrently
Where it stops
- Federal only
- No reverse-exchange mechanics
Practical Use Cases
Deciding whether to exchange
Sizing the tax against the cost of the constraints.
Structuring the replacement
Testing value and debt for boot before committing.
Planning a partial exchange
Taking some cash out with eyes open.
Modelling the carryover basis
Seeing the depreciation you give up.
Managing the deadlines
Understanding that 45 and 180 run concurrently.
Methodology & Editorial Standards
Realized gain is net proceeds less adjusted basis. Tax on an outright sale splits the gain into unrecaptured section 1250 at twenty-five per cent and the remainder at the entered capital gains rate, with net investment income tax applied across the whole gain. Boot is cash plus net debt relief, and recognised gain is the lesser of boot and realized gain — the statutory rule. Carryover basis is replacement price less the deferred gain, which is what determines your future depreciation.
Computation runs in IEEE-754 double precision at full internal precision; rounding to two decimal places occurs strictly at the display layer, so no cumulative drift enters the result. All monetary outputs use accounting presentation — grouped thousands, two decimals, negatives in parentheses — so figures can be transcribed directly into a model or working paper. Division-by-zero and out-of-domain inputs return an em-dash rather than a misleading number.
This engine was reconciled against an independent reference implementation and hand-verified for the worked example above before release. Our full five-stage review process is published on the About Us page.
Disclaimer. This calculator is provided for informational and modelling purposes only and does not constitute financial, tax, legal, medical, or engineering advice. Verify all figures with a qualified professional before acting on them.
1031 Exchange Calculator — 10 Expert FAQs
10 analyst-written answers to the questions practitioners actually ask — optimised for voice and answer-engine retrieval.
What is a 1031 exchange?
A like-kind exchange under section 1031 that defers capital gains and depreciation recapture when investment real property is exchanged for other investment real property. Since 2018 it applies to real property only. It defers tax; it does not eliminate it.
What are the 45 and 180 day rules?
From the day your sale closes you have 45 calendar days to identify replacement property in writing and 180 days to close on it. They run concurrently, not consecutively, so identifying on day 45 leaves 135 days to close. Neither can be extended for any reason.
What is boot?
Anything you receive that is not like-kind property. Cash boot is proceeds you did not reinvest; mortgage boot is debt relief you did not replace. Both are taxable, and mortgage boot surprises people because it is taxed even though no money reached them.
Do I have to reinvest everything?
To defer the whole gain, yes — trade up in both value and debt and reinvest all the net proceeds. A partial exchange is perfectly legitimate; you simply recognise gain equal to the boot, which is the lesser of what you took out and the total gain.
What are the identification rules?
Three options. The three-property rule lets you identify up to three properties of any value and is the most commonly used. The 200 per cent rule allows any number provided their combined value stays within twice the relinquished price. The 95 per cent rule allows any number if you actually acquire at least ninety-five per cent of the identified value.
Do I need a qualified intermediary?
Yes, and this is not negotiable. The intermediary must hold the proceeds from closing until the replacement purchase. If the money passes through your hands, or is held by your own attorney or accountant who has acted for you recently, the exchange is disqualified entirely.
How does the basis carry over?
Your replacement basis is broadly the replacement price less the deferred gain, so the gain rides inside the new property. The practical consequence is a smaller depreciation deduction than an outright buyer of the same building enjoys — the real, rarely priced cost of exchanging.
Can I exchange into multiple properties?
Yes, and you can exchange several properties into one. The identification rules govern how many you may name, and full deferral still requires the combined replacement value and debt to meet or exceed what you gave up.
What happens if I miss a deadline?
The exchange fails and the entire gain becomes taxable in the year of the original sale. There are no hardship extensions, no grace for weekends, and the only relief ever granted has been in federally declared disasters. This is why experienced investors identify conservatively and early.
Is the tax ever actually paid?
Only if you eventually sell without exchanging. The liability follows you through every subsequent exchange and is extinguished by a step-up in basis at death, which is why the exchange-until-death pattern is so common. Whether that step-up survives future legislation is a separate risk.