1031 Exchange Calculator

How This Calculator Works

The 1031 Exchange Calculator helps you estimate the tax deferral and new basis when you sell an investment property and purchase a like-kind replacement property using a 1031 exchange. It compares the tax impact of a 1031 exchange versus a taxable sale.

• Inputs: Sale price, selling costs, original cost basis, improvements, depreciation taken, mortgage payoff, replacement property price, closing costs, new mortgage, boot received, exchange expenses, federal/state capital gains tax rates, depreciation recapture rate, and years depreciated.
• Outputs: Realized gain, recognized (taxable) gain, deferred gain, depreciation recapture tax, capital gains taxes, total tax owed, and new basis in the replacement property. Also shows a side-by-side comparison with a standard taxable sale.

What is a 1031 Exchange?
A 1031 exchange, named after Internal Revenue Code (IRC) Section 1031, allows you to defer paying capital gains taxes on investment property when it is sold, as long as another like-kind property is purchased with the profit gained. The rules are detailed in IRS Publication 544.

• Like-Kind Requirement: Both the relinquished and replacement properties must be held for investment or business use, not for personal use.
• Timing Rules: You must identify a replacement property within 45 days of selling your original property and complete the purchase within 180 days.
• Qualified Intermediary: The exchange must be facilitated by a qualified intermediary (QI); you cannot take possession of the sale proceeds.
• Boot: Any cash or non-like-kind property received ("boot") is taxable.
• Depreciation Recapture: Depreciation claimed on the relinquished property is subject to recapture and taxed at a higher rate.

Note: This tool is for informational purposes only. Actual tax outcomes may vary based on your specific situation. Always consult a qualified tax advisor or attorney before making decisions.