1031 Exchange Calculator

Free 1031 exchange calculator. Estimate capital gains tax savings, calculate boot on partial exchanges, and track 45/180-day deadlines. Compare selling vs exchanging.

Compare capital gains tax owed on an outright sale vs. tax deferred via a 1031 exchange.

$500,000
$
$300,000
$
$25,000
$
$50,000
$
%

Tax Details

$150,000
$

Tax Savings with 1031 Exchange

$65,695

Effective rate: 33.7% on $195,000 gain

Sell vs Exchange

Compare tax owed on an outright sale vs. a 1031 exchange

If You Sell

$65,695

Total tax owed

1031 Exchange

$0

Tax owed now

Tax Breakdown

Itemized federal, state, and recapture taxes on your gain

Adjusted Cost Basis$275,000
Selling Costs$30,000
Net Sale Proceeds$470,000
Total Gain$195,000
├ Capital Gain (15.0%)$145,000
├ Depreciation Recapture$50,000
Federal Capital Gains Tax (15.0%)$21,750
Depreciation Recapture Tax (25%)$12,500
Net Investment Income Tax (3.8%)$5,510
State Capital Gains Tax (13.3%)$25,935
Total Tax If Sold$65,695

Estimates based on 2025 federal tax brackets. Consult a tax professional or Qualified Intermediary for your specific situation. State rates are top marginal rates. Does not account for local taxes, AMT, or entity-level taxation.

What Is a 1031 Exchange?

Tax-deferred exchange of investment real estate under IRC Section 1031

A 1031 exchange (also called a like-kind exchange or Starker exchange) allows real estate investors to defer capital gains taxes when selling an investment property by reinvesting the proceeds into a similar replacement property. Named after Section 1031 of the Internal Revenue Code, this strategy lets you defer 100% of federal and state capital gains taxes, depreciation recapture, and the 3.8% Net Investment Income Tax.

To qualify, both properties must be held for investment or business use (not primary residences), and you must follow strict timelines: identify replacement properties within 45 days and close within 180 days of selling the relinquished property. A Qualified Intermediary (QI) must hold the sale proceeds — you cannot touch the funds directly.

Tax Deferral

Defer federal capital gains tax at 15-20%, plus state tax and depreciation recapture

Wealth Building

Reinvest the full sale proceeds instead of losing 30-40% to taxes

Portfolio Upgrade

Trade up to higher-value or better-located investment properties

Estate Planning

Heirs receive a stepped-up basis, potentially eliminating deferred gains permanently

How to Calculate Capital Gains Tax on Real Estate

Step-by-step formula and methodology behind the numbers

Real estate capital gains tax involves several components that this calculator breaks down:

1

Adjusted Basis

Purchase Price + Improvements − Depreciation

2

Capital Gain

Sale Price − Selling Costs − Adjusted Basis

3

Total Tax

Federal CG Tax + Recapture Tax + NIIT + State Tax

The total gain is split into components, each taxed at different rates:

Capital Gains

0% / 15% / 20%

Based on taxable income and filing status

Depreciation Recapture

25% flat

Section 1250 recapture on depreciation claimed

NIIT Surcharge

3.8%

If MAGI exceeds $200K (single) / $250K (MFJ)

State Tax

0% – 13.3%

Varies by state: 0% (FL, TX, NV) to 13.3% (CA)

Example Inputs

Sale Price$500,000
Purchase Price$300,000
Improvements$25,000
Depreciation$50,000
Selling Costs (6%)$30,000

Tax Saved via 1031

Total Gain$195,000
Federal CG Tax$21,750
Recapture Tax$12,500
NIIT (3.8%)$5,510
State Tax (CA)$25,935
Total Deferred$65,695

Understanding Boot in a 1031 Exchange

What triggers partial taxation in an exchange

Boot is the portion of a 1031 exchange that does not qualify for tax deferral. Receiving boot may trigger a taxable event — recognized gain is generally the lesser of boot received and your realized gain on the exchange (Form 8824). There are two types:

Cash Boot

Occurs when you receive cash from the exchange — either directly or because you didn't reinvest all net equity into the replacement property.

Sell $500K → Buy $400K = $100K cash boot

Mortgage Boot

Occurs when the mortgage on the replacement property is less than the mortgage paid off on the relinquished property.

Pay off $300K → New $200K = $100K mortgage boot

Full Deferral

  • Reinvest all net equity
  • Equal or greater mortgage
  • Buy equal or higher value

Triggers Boot

  • Taking cash from proceeds
  • Reducing mortgage debt
  • Buying less expensive property

1031 Exchange Rules & Requirements

Critical rules that must be followed for a valid exchange

45-Day Identification Rule

You must identify potential replacement properties in writing within 45 calendar days of closing. You can identify up to 3 properties regardless of value (Three-Property Rule), or any number if total value doesn't exceed 200% of the relinquished property.

180-Day Exchange Rule

You must close on the replacement property within 180 calendar days of the sale, or by the due date of your tax return (including extensions) for the year of the sale — whichever comes first.

Qualified Intermediary (QI)

A QI must hold the sale proceeds. You cannot have actual or constructive receipt of the funds at any point. The QI cannot be your agent, attorney, accountant, or real estate broker.

Like-Kind Property

Both properties must be real property held for investment or business use. Since the Tax Cuts and Jobs Act of 2017, personal property no longer qualifies. Primary residences do not qualify, but vacation rentals may.

Same Taxpayer

The same taxpayer (individual or entity) that sells the relinquished property must acquire the replacement property. The title must be held in the same name on both transactions.

Frequently Asked Questions

Common questions about 1031 exchanges, boot calculations, and tax deferral rules

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Last updated Apr 12, 2026