1031 Exchange Stack — Free Calculator, Rules & Tools

Q: How do I calculate capital gains on a 1031 exchange?

Capital gains in a 1031 exchange are calculated as: (1) Adjusted basis = purchase price + capital improvements − accumulated depreciation. (2) Capital gain = net sale price − adjusted basis. (3) Depreciation recapture = the lesser of accumulated depreciation or total gain (taxed at 25%). (4) Capital gains tax without exchange = capital gain × (federal rate + state rate + NIIT). (5) With a full 1031 exchange, boot is $0, so tax deferred = total tax from step 4. Use our calculator above to run the exact numbers for your property.

Q: What is the capital gains tax rate for a 1031 exchange?

Federal long-term capital gains rates are 0%, 15%, or 20% depending on income. Most investors in the exchange income range pay 15–20%. Additionally: depreciation recapture is taxed at 25% (Section 1250), the Net Investment Income Tax (NIIT) adds 3.8% if your AGI exceeds $200k single/$250k joint, and state capital gains taxes range from 0% (TX, FL, NV, WA) to 13.3% (CA). Total combined tax burden can reach 30–38% without an exchange. A 1031 exchange defers all of these taxes until a future taxable sale.

Q: How do you do a 1031 exchange step by step?

Step-by-step 1031 exchange process: (1) Decide to exchange before closing on the sale. (2) Hire a Qualified Intermediary (QI) — required to hold sale proceeds. (3) Sell your relinquished property; proceeds go to QI, not you. (4) Within 45 days of closing, identify up to 3 replacement properties in writing to your QI. (5) Close on the replacement property within 180 days of your sale closing. (6) QI transfers proceeds directly to the replacement property closing. (7) File IRS Form 8824 with your tax return. Cost: QIs typically charge $800–$1,500 for a standard exchange.

Q: What properties qualify for a 1031 exchange?

Qualifying properties for a 1031 exchange must be "like-kind" investment or business real estate: single-family rentals, multi-family apartments, commercial buildings (office, retail, industrial), raw land, vacation rentals (rented 14+ days/yr), DSTs (Delaware Statutory Trusts), and TIC (Tenants-in-Common) interests. Properties that do NOT qualify: your primary residence, vacation homes used primarily personally (not rented), inventory/dealer property (properties bought to flip), and stock or partnership interests.

Q: What is a Qualified Intermediary (QI) in a 1031 exchange?

A Qualified Intermediary (QI) — also called an accommodator or exchange facilitator — is the legally required third party that holds your sale proceeds during a 1031 exchange. You cannot touch the money between the sale and the purchase, or the exchange is disqualified. QIs prepare the exchange documents, hold the proceeds in a segregated account, and coordinate with title/escrow at both closings. Fees range from $800–$2,000 for a standard forward exchange. Choose a QI that carries fidelity bonds and E&O insurance and keeps funds in separate client accounts.

RealEstateStackHub

🔄 1031 Exchange Stack

Free calculator, rules reference, comparison tools, QI directory, and state tax guide — everything for your 1031 exchange in one place.

🧮 Run the Calculator 📊 Compare Strategies 🏢 Find a QI

🤖 Ask About Your 1031 Scenario

Selling a rental property? Unsure if your exchange qualifies? Wondering about boot, timelines, or property types? Ask the AI — it knows the rules cold.

"Will my exchange qualify if I trade down?" "How much tax will I defer on a $600k gain?" "What are the 45/180 day deadline rules?"

1 Capital Gains & Tax Deferral Calculator

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1031 Exchange Analysis

Enter your relinquished and replacement property details to calculate exact tax deferred

📤 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 ($)

📥 Replacement Property (Buying)

Replacement Property Price ($)

New Mortgage on Replacement ($)

Federal Capital Gains Rate

State Capital Gains Rate (%) 0% for TX, FL, NV, WA; up to 13.3% in CA

Net Investment Income Tax

1031 Exchange Results

Data: ESTIMATE SEEK EXPERT ADVICE LAST UPDATED Apr 2026

Total Gain (realized)

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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. depreciation)—

Depreciation Recapture (25%)—

Boot (cash / debt relief)—

Exchange Qualifies Fully?—

Extra Capital to Reinvest—

2 1031 Exchange Timeline & Rules

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Day 0 — Sale Closing

Sign exchange agreement with QI before or at closing. Proceeds go to QI — never to you.

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Day 1–45 — Identification Window

Identify up to 3 replacement properties in writing to your QI. Extensions are not available.

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Day 46–180 — Closing Window

Must close on identified replacement property within 180 days. This is a hard IRS deadline.

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Post-Closing — Report

File IRS Form 8824 with your tax return for the year of the exchange. QI provides a closing statement.

Core Rules at a Glance

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Like-Kind Property

Investment real estate → investment real estate. Broad definition — SFR, multi-family, commercial, land all qualify.

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Equal or Greater Value

Replacement property must be ≥ sale price and equity must be reinvested fully to avoid boot.

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Same Taxpayer Rule

The same entity that sold must be on title for the replacement. Consult a CPA if transferring to an LLC.

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3-Property Rule

Identify up to 3 properties with no value limit. The 200% rule allows more properties if combined FMV ≤ 200% of sale price.

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No Constructive Receipt

You cannot have actual or constructive control of proceeds at any point. QI must be engaged before closing.

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IRS Form 8824

File with your tax return in the year of sale. Carries the deferred basis forward. No payment due if fully deferred.

3 1031 Exchange vs. Selling Outright vs. Installment Sale

Factor	🔄 1031 Exchange	💸 Sell Outright	📃 Installment Sale
Tax Due Now	$0 (fully deferred)	Full amount immediately	Spread over installments
Capital Available to Reinvest	100% of equity	60–75% (after tax)	Partial each year
Complexity	Medium (QI required, timelines)	Low	Medium–High
QI / Professional Cost	$800–$2,000	$0 extra	CPA fees for structure
Depreciation Recapture	Deferred	Due at sale (25%)	Allocated over term
Must Reinvest In Real Estate	Yes — like-kind only	No restriction	No restriction
Step-Up at Death	Yes — heirs inherit at FMV, deferred tax wiped out	N/A — tax already paid	Partially — basis rules apply
Best For	Investors staying in RE long-term	Exiting real estate entirely	Sellers needing income stream, buyers needing financing

💡 Power move: Do a series of 1031 exchanges throughout your lifetime and step up the basis at death. Your heirs inherit the properties at fair market value — all accumulated deferred taxes are permanently eliminated.

4 Property Types: What Qualifies?

✅ Qualifying Property Types

🏠Single-family rentals — must be held for investment, not personal use
🏢Multi-family apartments — duplexes through large apartment complexes
🏭Commercial real estate — office, retail, industrial, warehouse
🌾Raw land — held for investment or development
🏖️Vacation rentals — rented 14+ days/year and personal use ≤ 14 days/year
🏗️DSTs — Delaware Statutory Trusts (fractional institutional RE)
🤝TIC interests — Tenants-in-Common co-ownership
⛽Mineral rights — in certain circumstances (consult a QI)

❌ Non-Qualifying Property

🏡Primary residence — use Section 121 exclusion instead ($250k/$500k)
🏖️Personal vacation homes — used primarily for personal enjoyment
🔨Dealer/inventory property — properties bought to flip (short-term hold)
📊Stock, bonds, partnership interests — financial securities
🏎️Personal property — vehicles, equipment (no longer eligible post-TCJA)
🌍Foreign real estate — exchanges to/from foreign property do not qualify

5 Qualified Intermediary Directory

You must hire a QI before closing. These are some of the largest and most established QIs in the US. Always verify licensing and fidelity bonding before engaging.

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Exeter 1031 Exchange Services

National leader, FDIC insured accounts

One of the largest independent QIs in the US. Strong reputation for customer service, segregated accounts, and compliance. Multiple locations nationwide.

Forward ExchangeReverse ExchangeBuild-to-Suit

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IPX1031

Fidelity National Financial subsidiary

Backed by Fidelity National Financial, one of the largest title insurance companies in the US. Institutional security, nationwide offices, strong compliance infrastructure.

Forward ExchangeReverse Exchange

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Asset Preservation Inc. (API)

Stewart Title subsidiary

A Stewart Title company. Offers comprehensive 1031 services with educational resources. Particularly strong in California and the West Coast. Known for investor education.

Forward ExchangeDST Exchanges

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Accruit

Enterprise-grade, technology-forward

Technology-focused QI with an online client portal, real-time reporting, and strong compliance infrastructure. Popular with sophisticated investors and high-volume exchangers.

Forward ExchangeReverse ExchangeImprovement Exchange

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Equity Advantage

Independent, educator-focused

Portland, OR-based independent QI known for investor education and willingness to handle complex or unusual exchange structures. Strong on construction (improvement) exchanges.

Forward ExchangeImprovement Exchange

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Old Republic Exchange

Old Republic International subsidiary

Backed by Old Republic International, a Fortune 500 insurance holding company. Offers fidelity bonding and institutional security. Nationwide coverage with strong Midwest and Southeast presence.

Forward ExchangeReverse Exchange

⚠️ QI Selection Checklist: Fidelity bond ($1M+) · E&O insurance · Segregated client accounts (not commingled with firm funds) · Backed by bonded surety or institutional parent · FEA member (Federation of Exchange Accommodators). Never use your CPA, attorney, or real estate agent as QI — they're legally disqualified.

6 State-by-State Capital Gains Tax for Real Estate

Most states honor the 1031 exchange deferral, but some states require clawback notices or have additional rules. Note: a 1031 exchange defers federal AND state taxes in most states.

State	State CG Rate	1031 Honored?	Notes
TX, FL, NV, WA, WY, AK, SD, TN, NH	0%	✅ Yes	No state income tax — only federal deferred
CA	Up to 13.3%	⚠️ Partial	CA defers taxes but requires clawback form (FTB 3840) if replacement property is out-of-state
NY	Up to 10.9%	✅ Yes	NY conforms to federal 1031 rules; NYC adds 3.876% city tax
CO	4.4%	✅ Yes	Flat rate; conforms to federal rules
IL	4.95%	✅ Yes	Flat rate; 1031 fully honored
OR	Up to 9.9%	⚠️ Clawback	Oregon may clawback deferred gain if replacement sold to non-OR property. File OR notification.
MA	Up to 12%	✅ Yes	Short-term gains taxed at 12%; long-term at 5%. 1031 defers both.
PA	3.07%	❌ No conformity	Pennsylvania does NOT recognize IRC 1031. State tax is due at sale regardless of exchange.
AZ, GA, NC, VA, OH	2.5–5.75%	✅ Yes	These states conform to federal 1031. See your CPA for exact rates and any local surcharges.

⚠️ State tax law changes frequently. Always verify current rules with a licensed CPA in your state before completing an exchange. Pennsylvania non-conformity is a critical planning consideration.

Frequently Asked Questions

How does a 1031 exchange tax calculator work? +

A 1031 exchange tax calculator computes capital gains tax deferred by comparing what you would owe if you sold outright versus what you owe inside a 1031 exchange. Inputs: net sale price, original purchase price, capital improvements, accumulated depreciation, existing mortgage, replacement property price, new mortgage, and your capital gains tax rate (15% or 20% federal, plus state rate and the 3.8% NIIT). Outputs: adjusted cost basis, capital gain, depreciation recapture, boot, total tax deferred, and total extra capital available to reinvest. Use the calculator at the top of this page to run your numbers.

How do I calculate capital gains in a 1031 exchange? +

Capital gain = net sale price minus adjusted basis. Adjusted basis = purchase price + capital improvements − accumulated depreciation. Depreciation recapture (taxed at 25%) = the lesser of accumulated depreciation or total realized gain. In a full 1031 exchange with zero boot, all capital gains tax and depreciation recapture is deferred to a future sale. Boot (any cash or debt relief received) is immediately taxable at your combined rate.

What is the capital gains tax rate for a 1031 exchange? +

Federal long-term capital gains tax rates are 0%, 15%, or 20% depending on income. Most real estate investors fall in the 15–20% bracket. Additionally: depreciation recapture is taxed at 25% (not deferred unless you do the exchange), the Net Investment Income Tax (NIIT) adds 3.8% if AGI exceeds $200k single / $250k joint, and state rates range from 0% (TX, FL, NV, WA) to 13.3% (CA). Total without an exchange: 25–38%. With a full 1031 exchange: $0 due at closing.

What is the 1031 exchange calculation formula? +

The core 1031 exchange calculation: (1) Realized gain = net sale price − adjusted basis. (2) Recognized (taxable) gain = boot received. (3) Deferred gain = realized gain − recognized gain. (4) Tax deferred = deferred gain × combined tax rate. (5) Boot = max(0, debt relief) + max(0, cash received at closing). To fully defer: replacement price ≥ sale price, new mortgage ≥ old mortgage, and $0 cash received. Use the calculator above to model any scenario instantly.

How do you do a 1031 exchange step by step? +

Step 1: Decide to exchange and contact a QI before closing (you cannot engage one after). Step 2: Sell the relinquished property — proceeds go to QI, not you. Step 3: Within 45 days, identify up to 3 replacement properties in writing to your QI. Step 4: Close on the identified replacement property within 180 days of sale closing. Step 5: QI transfers proceeds directly at the replacement closing. Step 6: File IRS Form 8824 with your annual tax return. Typical QI cost: $800–$1,500 for a standard forward exchange.

What is boot in a 1031 exchange and how is it taxed? +

Boot is any non-like-kind property or cash you receive during the exchange. Two types: (1) Cash boot — any cash returned at closing because you didn't reinvest all proceeds. (2) Mortgage boot (debt relief) — if your new mortgage is less than your old mortgage, the difference is boot. Boot is taxable in the year of the exchange, even though the rest of the gain is deferred. It's taxed at capital gains rates (plus NIIT if applicable), not ordinary income rates.

Can I use a 1031 exchange with a DST (Delaware Statutory Trust)? +

Yes. DSTs are IRS-recognized replacement properties under Revenue Ruling 2004-86. They're popular for investors who want: (1) to defer a 1031 exchange without the management burden of direct ownership, (2) fractional ownership in institutional-quality properties (large apartments, industrial, NNN), or (3) geographic diversification across multiple properties. Minimum investment is typically $50k–$100k. DST interests are illiquid — treat them as long-term holds.

What happens to deferred 1031 taxes when you die? +

This is the "swap till you drop" strategy. When you die holding a 1031-exchanged property, your heirs receive it at a stepped-up basis equal to fair market value at date of death. The deferred gain from all prior exchanges is permanently eliminated — heirs owe zero capital gains tax on that accumulated gain. This is one of the most powerful wealth transfer strategies in the US tax code. However, the estate may owe federal estate tax if the estate exceeds the exemption threshold ($13.6M in 2024).

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Financial estimates only — not professional advice. Results are calculated projections based on your inputs. 1031 exchange information on this page is for educational purposes only. Tax laws, rates, and rules change. This page does not constitute tax or legal advice. Consult a licensed CPA, tax attorney, and Qualified Intermediary before completing any 1031 exchange. Real estate investments involve risk. Consult a licensed financial advisor, CPA, or real estate attorney before making investment decisions. Full disclaimer →