1031 Exchange Calculator
Like-kind exchange under IRC §1031. Estimate realized gain, boot, recognized gain, deferred tax, and your basis in the replacement property.
Results
Tax deferred vs full sale
$76,440
Total tax due now
$0
Realized gain
$255,000
Recognized gain
$0
Deferred gain
$255,000
Boot analysis
- Cash boot: $0
- Mortgage boot: $0
- Total boot: $0
Tax breakdown
- Federal capital gains: $0
- Depreciation recapture: $0
- Net investment income tax: $0
- State income tax: $0
- Total: $0
Replacement property basis
Your basis in the replacement property: $445,000
Replacement price ($700,000) minus the deferred gain ($255,000). Lower basis means more depreciation recapture later.
What this tool does and doesn't do
This is an educational estimator. It models the standard rules: adjusted-basis calculation, boot (cash + mortgage), recognized gain, depreciation recapture at the §1250 rate, and basis carryover into the replacement property.
It does NOT replace a qualified intermediary (required for any actual 1031) or a CPA. The 45-day identification window and 180-day close window are also not modeled here — those are calendar constraints, not math.
Frequently asked questions
What is a 1031 exchange?
IRC §1031 lets an investor defer capital gains tax and depreciation recapture by exchanging one investment property for another like-kind property. The gain doesn't disappear — your basis in the replacement carries over reduced, so the deferred tax is owed if and when you eventually sell outside an exchange. Many investors keep exchanging until they pass the property to heirs, who receive a stepped-up basis (the so-called 'swap until you drop' play).What's the 45-day and 180-day rule?
From the day you close on the relinquished property, you have 45 days to identify (in writing, to your qualified intermediary) the replacement properties, and 180 days to close on at least one of them. Both deadlines run concurrently. Missing either by a day collapses the entire deferral and makes the full gain immediately taxable. There are no extensions except in very narrow disaster-declaration scenarios.What counts as 'like-kind' property?
Real property held for investment or productive use in a trade or business is like-kind to any other real property held for the same purpose. Raw land for an apartment building, a duplex for a strip retail, an office for a warehouse — all qualify. Personal residences, dealer property (held for resale), partnership interests, and foreign real estate do not qualify.What is 'boot' in a 1031 exchange?
Boot is anything non-like-kind you receive in the trade. Cash boot is leftover sale proceeds that didn't get reinvested. Mortgage boot is debt relief — when your new loan is smaller than the loan you paid off. Boot is taxable up to the amount of your realized gain. To avoid boot entirely, the replacement property must equal or exceed the relinquished property in BOTH price and debt.Do I need a qualified intermediary?
Yes — for any actual 1031, you must use a qualified intermediary (QI) who holds the sale proceeds between closings. You can never touch the cash yourself; even brief constructive receipt collapses the exchange. QIs typically charge $750–$2,500 per exchange and provide the legal identification forms. Engage one before you list the relinquished property, not after.Can I 1031 into a property I'll live in?
Not immediately. The replacement must be held for investment or business use at the time of acquisition. IRS safe harbor (Rev. Proc. 2008-16) requires renting at fair market value for at least 14 days each year in the first two years, with personal use under 14 days or 10% of rental days, whichever is greater. After holding it that way, conversion to a personal residence is possible — though it triggers separate timing rules for the §121 exclusion.
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