1031 Exchange Calculator

Calculate how much capital gains tax you can defer through a Section 1031 like-kind exchange.

Relinquished Property (Selling)

Sale Price

Original Purchase Price

Capital Improvements

Accumulated Depreciation

Selling Costs (commissions)

Current Mortgage Balance

Replacement Property (Buying)

Replacement Property Price

New Mortgage

Federal Cap Gains Rate (%)

State Tax Rate (%)

Total Tax Deferred

$54,000

Realized Gain

$200,000

Deferred Gain

$130,000

Taxable (Boot)

$70,000

Boot Detected

Cash boot: $70,000 | Mortgage boot: $0

Tax owed on boot: $17,500

To avoid boot, ensure the replacement property is equal or greater in value and mortgage.

Exchange Details

Adjusted Basis$270,000

New Property Basis$470,000

Capital Gains Tax (deferred)$24,000

Depreciation Recapture (deferred)$20,000

State Tax (deferred)$10,000

1031 Exchange Timeline

Day 0: Close on relinquished property
Day 45: Identify replacement property (up to 3 properties)
Day 180: Close on replacement property

Disclaimer

1031 exchanges have strict rules. Use a Qualified Intermediary (QI) and consult a tax advisor. This is an estimate only.

What Is a 1031 Exchange?

Section 1031 of the Internal Revenue Code allows real estate investors to defer capital gains taxes by reinvesting the proceeds from a sold property into a "like-kind" replacement property. The tax isn't eliminated — it's deferred until the replacement property is eventually sold (unless you do another 1031 exchange).

Key 1031 Exchange Rules

Requirement	Details
Like-Kind	Any real property held for investment or business use
45-Day Rule	Identify replacement property within 45 days of sale
180-Day Rule	Close on replacement property within 180 days
Equal or Greater	Replacement must be equal or greater in value to fully defer
Qualified Intermediary	Must use a third-party intermediary to hold funds
Same Taxpayer	Same taxpayer on both the sale and purchase

What Is Boot?

"Boot" is any cash or non-like-kind property received in the exchange. If you buy a cheaper replacement property or take cash out, the difference is taxable boot. For example, selling a $500,000 property and buying a $400,000 replacement creates $100,000 in taxable boot.

IRS Publication 544 — Like-Kind Exchanges→

Frequently Asked Questions

Can I 1031 exchange my primary residence?

No — 1031 exchanges only apply to property held for investment or business use. However, you may be able to convert a rental property to a primary residence (living in it for 2+ years) and then use the Section 121 exclusion ($250K/$500K) when you sell.

What are the costs of a 1031 exchange?

Qualified intermediary fees typically run $750-$1,500. You'll also pay normal closing costs on both transactions. The tax savings usually far exceed the costs — on a $200,000 gain, you could defer $30,000-$50,000 in taxes.