1031 Exchange Calculator

Q: What is a 1031 exchange in real estate?

A 1031 exchange (named after Section 1031 of the IRS tax code) allows real estate investors to defer capital gains taxes when selling an investment property by reinvesting the proceeds into a "like-kind" replacement property. Instead of paying 15–20% capital gains tax plus 25% depreciation recapture tax at sale, you roll the full proceeds into a new property and defer taxes indefinitely. The deferred taxes become due when you eventually sell without doing another 1031 exchange.

Q: How much can you save with a 1031 exchange?

A 1031 exchange can save significant amounts in taxes. On a $500,000 property held for 10 years with $200,000 in capital gains and $50,000 in depreciation: Capital gains tax (15–20%) = $30,000–$40,000. Depreciation recapture (25%) = $12,500. Total tax saved = $42,500–$52,500. This saved capital can be reinvested into a larger replacement property, accelerating wealth building through compounding.

Q: What are the rules for a 1031 exchange?

Key 1031 exchange rules: (1) 45-day identification window — you must identify replacement property within 45 days of selling the relinquished property. (2) 180-day closing window — you must close on the replacement property within 180 days. (3) Equal or greater value — replacement property must be of equal or greater value to defer all taxes. (4) Like-kind property — both properties must be investment or business real estate (not personal residences). (5) Qualified intermediary — you cannot touch the sale proceeds; they must flow through a qualified intermediary.

Q: What is "boot" in a 1031 exchange?

Boot refers to any non-like-kind property or cash received during a 1031 exchange. If you trade down in value or receive cash back, the difference is called "boot" and is taxable. For example: Selling for $400,000 and buying replacement for $350,000 means $50,000 in boot, which is subject to capital gains tax. To avoid boot: buy at equal or greater value, reinvest all equity (including debt payoff), and trade up in mortgage debt or pay all cash.

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🔄 1031 Exchange Calculator

A 1031 exchange lets you defer capital gains taxes by reinvesting sale proceeds into a like-kind property within 180 days of closing.

Calculate how much capital gains tax you can defer with a like-kind 1031 exchange. Includes boot analysis, depreciation recapture, and total tax savings.

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1031 Exchange Analysis

Relinquished property + replacement property details

📤 Relinquished Property (Selling)

Net Sale Price ($) After selling costs / commissions

Original Purchase Price ($)

Capital Improvements Added ($)

Accumulated Depreciation ($) Total depreciation taken over holding period

Existing Mortgage on Relinquished ($)

📥 Replacement Property (Buying)

Replacement Property Price ($)

New Mortgage on Replacement ($)

Federal Capital Gains Tax Rate (%)

State Capital Gains Tax Rate (%)

Net Investment Income Tax (%)

1031 Exchange Results

Data: ESTIMATE SEEK EXPERT ADVICE LAST UPDATED Apr 2026

Capital Gain

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Tax Without Exchange

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Tax WITH Exchange

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Total Tax Deferred

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Detailed Breakdown

Adjusted Cost Basis—

Capital Gain (excl. depr.)—

Depreciation Recapture—

Boot (cash/debt relief)—

Exchange Qualifies?—

Total Capital Kept (vs. No Exchange)—

How a 1031 Exchange Works

Under IRC Section 1031, you can defer capital gains tax when you sell an investment property and reinvest in a like-kind replacement property. Rules: 45 days to identify, 180 days to close.

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45-Day ID Rule

Must identify replacement within 45 days

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180-Day Close

Must close on replacement within 180 days

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No Boot

Receive no cash; replace equal or greater equity

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Like-Kind Property

Investment real estate → investment real estate

Frequently Asked Questions

What is "boot" in a 1031 exchange? +

Boot is any cash or non-like-kind property received in the exchange, or any reduction in mortgage (debt relief). Boot is taxable immediately, even in a 1031 exchange. To fully defer taxes, you must replace all equity AND take on equal or greater debt.

What is depreciation recapture? +

Depreciation recapture (Section 1250) is taxed at 25% federal rate on the amount of depreciation you've claimed over the holding period. This is separate from capital gains tax. A 1031 exchange defers this tax too, but it will be owed when you eventually sell without exchanging.

Can I do a 1031 exchange on my primary residence? +

No. 1031 exchanges are for investment or business properties only. Your primary residence qualifies for the Section 121 exclusion instead ($250k/$500k capital gains exclusion).

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Financial estimates only — not professional advice. Results are calculated projections based on your inputs. Tax savings shown are estimates based on federal capital gains rates. State taxes, depreciation recapture calculations, and individual circumstances vary. Consult a qualified 1031 exchange intermediary and CPA before proceeding. Real estate investments involve risk. Consult a licensed financial advisor, CPA, or real estate attorney before making investment decisions. Full disclaimer →

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Want more than a calculator?

The 1031 Exchange Stack includes this calculator plus rules reference, QI directory, comparison table, and state-by-state tax guide.

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