1031 Exchange Calculator
What defers, what does not, and the two dates that decide it.
What you are selling
What you are buying
To defer everything you generally need to buy at or above the sale price and replace at least as much debt as you retired.
Tax rates
Tax deferred
$85,580
93.44% of the gain rolls forward
Tax due now
$6,250
On $25,000 of boot
The clocks
- Identify replacements by2026-10-2245 days
- Close by2027-03-06180 days
Calendar days from the relinquished closing, including weekends and holidays. There is no extension for a deal falling through.
| Net sale proceeds | $705,000 |
|---|---|
| Realized gain | $381,000 |
| Of which depreciation recapture | $96,000 |
| Cash boot | $25,000 |
| Mortgage boot | $0 |
| Gain recognised now | $25,000 |
| Gain deferred | $356,000 |
| Tax if you just sold | $91,830 |
| Basis in the replacement | $544,000Reduced by the deferred gain — less to depreciate next time |
Informational arithmetic, not tax advice. A 1031 requires a qualified intermediary engaged BEFORE the relinquished property closes — you cannot take receipt of the proceeds and fix it afterwards. Rates, state treatment, partial exchanges, related-party rules and identification limits all vary. Work with a QI and a tax adviser.
Two things ruin exchanges, and both are arithmetic
A 1031 defers the tax on an investment property gain when the proceeds go into like-kind property. The concept is simple and the execution is unforgiving, because two specific things go wrong and neither requires bad judgement — only inattention.
The first is boot. Cash you take out of the exchange is taxable, which everyone expects. The version that catches people is debt relief: retire a $280,000 mortgage and replace it with $180,000 and you have received $100,000 of benefit, taxable, with no cash having moved anywhere.
That is the trade-down trap. An investor sells a leveraged property, buys something more expensive but with less debt because rates moved, and believes they traded up. On price they did. On debt they did not, and the difference is recognised gain. You can fix it by replacing the debt or by adding cash — the arithmetic only cares about the totals — but you have to see it coming.
The second is the deadlines. Forty-five days from closing to formally identify replacements, 180 days to close. Calendar days, including weekends and holidays. They run concurrently, not in sequence, and they do not move because your target fell through or a lender was slow. This page computes both dates from your closing rather than describing the rule, because a date on a calendar is harder to misjudge than a number of days.
Worth being clear about what a 1031 actually is: a deferral, not an exemption. The gain you defer is carried forward by reducing your basis in the replacement property — on the default scenario a $900,000 purchase carries a basis of only $544,000. That means less depreciation on the new property and a larger gain when you eventually sell. The page shows that reduced basis deliberately, so the deferral reads as a trade rather than a win.
What you buy with it is time and the use of money. Deferring $85,580 for a decade while it works in another property is genuinely valuable, and the exchange can be repeated. But it is a loan against a future tax bill, and the bill grows.
One thing this calculator cannot help with, and the only mistake here that is unrecoverable: a qualified intermediary must be engaged before the relinquished property closes and must receive the proceeds. If the money touches your account the exchange is over. Everything else on this page is arithmetic you can revise; that is not.
For what the depreciation being recaptured was worth in the first place, see the depreciation calculator.
Methodology
- Realized gain = net sale proceeds − (basis − accumulated depreciation).
- Boot = cash taken out + debt relief, capped at the realized gain. Recognised gain equals the boot; deferred gain is the remainder.
- Tax applies the recapture rate to the depreciation portion and capital gains plus NIIT plus state to the rest. Recognised gain is treated as recapture first — the conservative ordering.
- Replacement basis = purchase price − deferred gain.
- Deadlines = closing + 45 and closing + 180, calendar days.
Not modelled: the three-property and 200% identification limits, reverse and improvement exchanges, related-party rules, partial-year proration, state-level non-conformity or clawback provisions, and the interaction with passive loss carryforwards. Any of those can change the answer.
Frequently asked questions
- What is boot in a 1031 exchange?
- Anything you receive that is not like-kind property. Cash taken out of the exchange is the obvious form. The one that surprises people is debt relief: if you retire more mortgage than you take on, the difference is boot and it is taxable, even though no cash changed hands. Boot does not disqualify the exchange — it just becomes the part of the gain you recognise now.
- What are the 45 and 180 day rules?
- From the day the relinquished property closes you have 45 days to formally identify replacement candidates and 180 days to close on one. They are calendar days including weekends and holidays, they run concurrently, and they are absolute — there is no extension because a deal fell through or a lender was slow. The tool computes both dates from your closing date rather than describing them.
- How do I avoid boot entirely?
- Broadly, buy at or above what you sold for, replace at least as much debt as you retired, and roll all the proceeds. Take cash out or trade down on either price or debt and the shortfall becomes recognised gain. You can offset debt relief by adding cash to the purchase — the arithmetic only cares about the totals.
- Does a 1031 eliminate the tax or just delay it?
- Delay. The deferred gain is carried forward by reducing your basis in the replacement property, which means less depreciation there and a larger gain when you eventually sell. What it buys is time and the use of money you would otherwise have paid — which compounds, and can be repeated. The basis reduction is shown on this page so the deferral is visible as a trade rather than a win.
- Do I need a qualified intermediary?
- Yes, and this is the part that cannot be fixed afterwards. A QI must be engaged before the relinquished property closes and must receive the proceeds — if the money reaches you, even briefly, the exchange fails. Every other mistake on this page is recoverable arithmetic; that one is not.
- Is depreciation recapture deferred too?
- In a full exchange, yes — recapture rolls forward with the rest of the gain. Where there is boot, this calculator treats the recognised portion as recapture first, which is the conservative reading and produces the larger bill. Your accountant may apply a different ordering depending on the facts.
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