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Finance Calc Kit
Real estate

1031 Exchange Calculator

Calculate how much capital gains tax you can defer with a Section 1031 like-kind property exchange. Enter your relinquished and replacement property details to see realized gain, boot, recognized gain, and carryover basis.

Relinquished property

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$
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$

Replacement property

$
$

Tax assumptions

%

Estimated tax deferred

$43,200.00

Realized gain

$150,000.00

Deferred gain

$150,000.00

Recognized gain

$0.00

Carryover basis

$450,000.00

Exchange details

Adjusted basis$320,000.00
Net sale proceeds$470,000.00
Cash boot$0.00
Mortgage boot$0.00
Tax now (recognized)$0.00
Tax saved vs selling outright$63,200.00

Exchange timeline

45-day identification deadline

Oct 29, 2026

180-day closing deadline

Mar 13, 2027

This is an educational estimate. A qualified intermediary, CPA, and tax attorney should review your specific 1031 exchange before closing.
Report tool

What is a 1031 exchange?

A 1031 exchange, named after Section 1031 of the Internal Revenue Code, lets real estate investors sell an investment property and reinvest proceeds into a like-kind replacement property while deferring capital gains tax. Tax is deferred, not eliminated, because the gain carries into the replacement property's basis.

This calculator estimates deferred tax, boot (the taxable portion), depreciation recapture, carryover basis, and a side-by-side comparison of selling outright versus exchanging. Pair it with the adjusted basis calculator to compute the relinquished property basis, and the capital gains calculator to model a taxable sale without an exchange.

1031 exchange calculation steps

Adjusted Basis=Purchase Price+Improvements−Depreciation\text{Adjusted Basis} = \text{Purchase Price} + \text{Improvements} - \text{Depreciation}
Realized Gain=(Sale Price−Selling Costs)−Adjusted Basis\text{Realized Gain} = (\text{Sale Price} - \text{Selling Costs}) - \text{Adjusted Basis}
Recognized Gain=min⁡(Realized Gain,Cash Boot+Mortgage Boot)\text{Recognized Gain} = \min(\text{Realized Gain}, \text{Cash Boot} + \text{Mortgage Boot})
Deferred Gain=Realized Gain−Recognized Gain\text{Deferred Gain} = \text{Realized Gain} - \text{Recognized Gain}

Carryover basis on the replacement property equals its purchase price minus the deferred gain.

Worked example: full deferral with no boot

  1. Adjusted basis: $350,000 + $50,000 - $80,000 = $320,000
  2. Net sale proceeds: $500,000 - $30,000 = $470,000
  3. Realized gain: $470,000 - $320,000 = $150,000
  4. Boot: $0 cash boot and $0 mortgage boot when equity and debt are fully reinvested
  5. Tax deferred: $150,000 x 28.8% effective rate = $43,200 (federal 20%, state 5%, NIIT 3.8%)
  6. Carryover basis: $600,000 - $150,000 = $450,000

The 45-day and 180-day rules

After the sale closes, you have 45 calendar days to identify replacement properties in writing and 180 calendar days to complete the purchase. Both deadlines run concurrently from the sale closing date and cannot be extended.

Frequently asked questions

What is a 1031 exchange?
A 1031 exchange is a tax deferral strategy under Section 1031 of the U.S. tax code. Investors sell an investment property and reinvest into a like-kind replacement property without paying capital gains tax at the time of sale.
How much capital gains tax can I defer?
If you reinvest all equity and buy a replacement of equal or greater value with equal or greater debt, you can defer 100% of the capital gains tax on the realized gain, subject to boot received.
What is boot in a 1031 exchange?
Boot is any value received that is not like-kind property. Cash boot is sale equity you keep. Mortgage boot is debt relief when your new loan is smaller than the one paid off. Boot is taxable up to the realized gain.
What are the 45-day and 180-day rules?
You have 45 calendar days after closing to identify replacement properties and 180 calendar days to complete the purchase. Both clocks start on the sale closing date.
Is depreciation recapture deferred?
Yes. A fully deferred 1031 exchange postpones depreciation recapture along with the rest of the capital gain. The recapture liability carries forward into the replacement property.
What is carryover basis?
The replacement property takes a carryover cost basis equal to its purchase price minus the deferred gain. A lower basis means larger future gain when the property is eventually sold without another exchange.

Resources and references

The formulas and methods in this calculator were checked against these independent sources.