See how much tax a like-kind exchange of investment real estate could defer. Enter the sale price, your original cost, improvements and depreciation, the replacement property's price and both mortgages, and the calculator shows your realized gain, any cash or mortgage boot, the taxable and deferred gain, the tax due now and the basis of the new property.
Last updated:
Property you are selling
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Commissions, closing costs and qualified intermediary fees.
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Replacement property
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Tax rates
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Unrecaptured §1250 gain is taxed at your ordinary rate, capped at 25%.
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Applies above $200,000 MAGI (single) or $250,000 (married filing jointly).
Enter your values to see the result.
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How to use the 1031 Exchange Calculator
Enter the sale price and selling costs of the property you are giving up.
Enter your original price, improvements and depreciation to get the adjusted basis.
Enter the mortgage paid off at the sale.
Enter the replacement price, closing costs and new mortgage.
Choose your tax rates and press Calculate deferred gain to see boot, taxable gain, deferred gain and new basis.
How the 1031 exchange math works
Amount realized = sale price − selling and exchange costs
Adjusted basis = original price + capital improvements − depreciation
Realized gain = amount realized − adjusted basis
Cash boot = exchange equity not used to buy the replacement
Mortgage boot = debt paid off − new debt − extra cash you add (not below 0)
Recognized (taxable) gain = the smaller of realized gain and total boot; the rest is deferred
Replacement basis = replacement cost − deferred gain
Example with the default numbers: selling for $650,000 with $39,000 of costs gives an amount realized of $611,000. The adjusted basis is $380,000 + $40,000 − $95,000 = $325,000, so the realized gain is $286,000. Buying a $750,000 replacement with a $360,000 loan uses all $391,000 of equity (plus $11,000 of your own cash) and more than replaces the $220,000 of debt, so there is no boot and the full $286,000 is deferred. In a regular sale at 25% recapture, 15% capital gains and 5% state, the tax would be about $23,750 + $28,650 + $14,300 = $66,700.
Exchange checklist
Rule
What it means
Like-kind real property
Investment or business real estate for other investment or business real estate (e.g. rental house for a small apartment building or land)
Qualified intermediary
The sale proceeds go to a qualified intermediary, never to you
45-day identification
Name replacement properties in writing within 45 days of the sale
180-day closing
Acquire the replacement within 180 days of the sale (or by the tax return due date, if earlier)
Same taxpayer
The taxpayer who sells must be the one who buys
Equal or greater value
Buy at least the net sale price and reinvest all equity to avoid boot
Exchanges are reported on IRS Form 8824. Selling your own home instead? Use the home sale capital gains calculator for the Section 121 exclusion.
Frequently asked questions
What is a 1031 exchange?
Section 1031 of the Internal Revenue Code lets you defer capital gains and depreciation recapture tax when you sell real property held for investment or business use and reinvest the proceeds in other like-kind real property. Since 2018 it applies only to real estate, not personal property, and not to your main home.
What is boot in a 1031 exchange?
Boot is anything you receive that is not like-kind property. Cash boot is exchange money you keep instead of reinvesting. Mortgage boot (debt relief) happens when the debt on the replacement property is lower than the debt paid off on the property you sold, unless you make up the difference with extra cash. Your taxable gain is the smaller of your realized gain and the boot.
How do I defer all of the gain?
Buy replacement property of equal or greater value than the net sale price, reinvest all of the exchange equity, and take on at least as much debt as you paid off (or add your own cash to make up any shortfall). The money must be held by a qualified intermediary; touching the proceeds yourself can disqualify the exchange.
What are the 45-day and 180-day rules?
You must identify potential replacement properties in writing within 45 days of selling the relinquished property, and close on the replacement within 180 days of the sale (or by your tax return due date including extensions, if earlier). Missing either deadline generally makes the whole gain taxable.
Does a 1031 exchange avoid depreciation recapture?
It defers it. Depreciation recapture on real property (unrecaptured Section 1250 gain, taxed at up to 25%) is deferred along with the capital gain and carries into the replacement property through its lower basis. If boot is received, the recognized gain is treated as recapture first.
What is the basis of the replacement property?
In general it is the cost of the replacement property minus the deferred gain. A lower basis means smaller depreciation deductions and a larger gain when you eventually sell without another exchange.
Is this calculator tax advice?
No. It applies the standard boot and basis rules to estimate the outcome. Real exchanges involve details such as allocating basis between land and building, related-party rules, partial exchanges and state rules. Work with a qualified intermediary and a tax professional before you sell.
Are all the tools on FreeToolCabin tested for quality and accuracy?
Yes! Every tool on our site undergoes automated Q/A testing in real browser environments to ensure high precision, correct output, and zero errors. If you happen to spot a bug or have a suggestion, please contact us at [email protected] and our team will review it right away.