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1031 Exchange Calculator

Pressure-test a like-kind exchange before you list the relinquished property. Estimate realized gain, depreciation recapture, recognized boot, and the minimum replacement price and debt you need to fully defer capital gains tax.

Relinquished property

$
$
$
$
$
$

Replacement property

$
$
$

Tax rates

%
%
%

Tax deferred by exchange

$65,644

vs $91,872 if sold outright

Realized gain

$306,500

Basis: $281,000

Recognized (taxable) gain

$87,500

Boot: $87,500

Deferred gain

$219,000

Exchange safety check

Replacement falls short of the full reinvestment rules. Expect taxable boot equal to the shortfall — trading down in price, cash, or debt all trigger recognized gain.

Minimum replacement price

$587,500

to defer all gain

Minimum replacement debt

$210,000

matches relinquished loan

Cash that must be reinvested

$377,500

net proceeds after debt

Cash boot

$87,500

proceeds not reinvested

Debt reduction boot

$0

mortgage trade-down

Depreciation recapture

$72,000

taxed at 25% if recognized

Tax bill if sold outright

Depreciation recapture (25%)$18,000
Federal capital gains (20%)$46,900
Net investment income tax (3.8%)$11,647
State tax (5.0%)$15,325
Total tax if sold$91,872

Estimates are directional. Actual exchange rules require a qualified intermediary, 45-day identification window, 180-day closing, and like-kind investment property on both sides. Confirm adjusted basis and depreciation with your tax professional before closing.

How to Use

  1. Enter the sale price, selling costs, and mortgage payoff for the relinquished property.
  2. Add the original purchase price, capital improvements, and accumulated depreciation to compute adjusted basis.
  3. Enter the replacement property purchase price, new loan, and qualified intermediary expenses.
  4. Set your federal capital gains rate, state rate, and net investment income tax so the deferred tax is specific to your situation.
  5. Review the minimum replacement price, debt, and cash reinvestment thresholds — falling short triggers taxable boot.

Frequently Asked Questions

What is a 1031 exchange?

A 1031 exchange lets an investor defer federal capital gains tax and depreciation recapture by swapping one investment property for another of like kind. The seller never takes constructive receipt of the proceeds — a qualified intermediary holds the funds between closings.

How do I fully defer tax?

Three tests: (1) the replacement property purchase price must equal or exceed the relinquished sale price, (2) all net cash proceeds must be reinvested, and (3) the debt on the new property must equal or exceed the old debt (or be offset by additional cash). Falling short on any test creates taxable boot.

What is boot?

Boot is the portion of the exchange that becomes taxable. Cash boot is proceeds the investor pockets. Debt boot is the reduction in mortgage liability between properties. Recognized gain equals the lesser of realized gain and total boot.

Does the 25% depreciation recapture rate apply inside the exchange?

A fully deferred 1031 defers both capital gains and depreciation recapture. But any recognized gain is taxed first as depreciation recapture at up to 25% until the recapture amount is exhausted, then at the capital gains rate on the remaining recognized gain.

What are the 45-day and 180-day rules?

The taxpayer has 45 calendar days after closing the relinquished property to identify up to three replacement candidates in writing, and 180 calendar days to close on one of them. Missing either deadline collapses the exchange and the full gain becomes taxable.

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