Free 1031 Exchange Calculator

Find out what selling your rental would cost in taxes, how much a 1031 exchange defers, and when your deadlines hit.

Quick Answer: A 1031 exchange lets you sell investment real estate and reinvest the proceeds in another investment property without paying capital gains tax now. It defers depreciation recapture (up to 25%), capital gains tax on the rest of the gain, and usually state tax. To defer all of it, identify a replacement within 45 days, close within 180 days, buy at least your net sale price, and reinvest all the cash.

1031 Exchange Calculator

Property You Are Selling

Original Purchase Price ($)Capital Improvements ($)Upgrades added to basis, like a new roof. Not routine repairs.Depreciation Taken ($)Total depreciation claimed while you owned it.Sale Price ($)Selling Costs ($)Commissions, title, and exchange fees.Sale Closing DateOptional. Used for your 45 and 180-day deadlines.

Replacement Property

Replacement Property Price ($)Leave blank to assume you buy at least your net sale price.Cash You Keep ($)Sale proceeds you take instead of reinvesting.

Tax Rates

Federal Capital Gains RateLong-term rate based on your taxable income.State Capital Gains Rate (%)Use 0 in states with no income tax.Add the 3.8% Net Investment Income TaxApplies when modified AGI is above $200,000 (single) or $250,000 (married filing jointly).

How a 1031 Exchange Saves You Tax

When you sell a rental for more than you paid, the IRS taxes the gain twice over: once on the depreciation you took (recapture) and again on the appreciation. A 1031 exchange pushes both into the future, so the full sale proceeds keep working in your next property. Use the IRR calculator to see what that extra equity can earn, and the rental property calculator to check the replacement's cash flow.

1031 Exchange Formulas

Adjusted Basis = Purchase Price + Improvements − Depreciation

Gain = (Sale Price − Selling Costs) − Adjusted Basis

Tax = Recapture (up to 25%) + Capital Gains Rate × Remaining Gain + State Tax

New Basis = Replacement Price − Deferred Gain

Worked Example

Bought for $300,000, added $20,000 of improvements, took $60,000 of depreciation: adjusted basis $260,000.
Sold for $550,000 with $33,000 of selling costs: net $517,000, gain $257,000.
Selling outright at 15% federal and 5% state: $15,000 recapture + $29,550 capital gains + $12,850 state = $57,400 of tax.
Exchange into a $600,000 property and reinvest all the cash: $0 due now, $57,400 deferred, and the new property's basis is $343,000.
Trade down to $480,000 instead and $37,000 is boot, costing about $11,100 now while $46,300 stays deferred.

1031 Exchange Rules to Know

Like-kind: Investment or business real estate for investment or business real estate. A single-family rental can become a small multifamily.
Qualified intermediary: The sale proceeds must go to an intermediary, not to you, or the exchange fails.
45 days: Identify replacement properties in writing.
180 days: Close on the replacement, or by your tax return due date if that is sooner.
Equal or greater: Buy at least your net sale price and reinvest all the cash to defer all of the tax.
Not for flips or your home: Property held for resale and primary residences don't qualify. See the fix and flip calculator for flips.

Frequently Asked Questions

What is a 1031 exchange?

A 1031 exchange, named after Section 1031 of the Internal Revenue Code, lets you sell investment real estate and buy other investment real estate without paying capital gains tax at the time of the sale. The tax is deferred, not forgiven: the deferred gain carries into the new property through a lower tax basis.

How do I calculate the tax a 1031 exchange defers?

Start with adjusted basis: purchase price plus capital improvements minus depreciation taken. Your gain is the sale price minus selling costs minus adjusted basis. The part of the gain equal to the depreciation you took is taxed at up to 25% federal (depreciation recapture), the rest at your long-term capital gains rate, plus state tax and possibly the 3.8% Net Investment Income Tax. In a full exchange, all of that tax is deferred.

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

You have 45 calendar days from the closing of your sale to identify replacement properties in writing, and 180 calendar days to close on them, or your tax return due date for that year (with extensions) if that comes first. Both clocks start at the same time and are not extended for weekends or holidays.

What is boot in a 1031 exchange?

Boot is value you receive that is not like-kind property, such as sale proceeds you keep or trading down to a cheaper property with less debt. Boot is taxable up to the amount of your gain. To defer all of the tax, buy a replacement worth at least your net sale price and reinvest all of your cash proceeds.

Can I do a 1031 exchange on a flip or my primary home?

No. Section 1031 covers real property held for investment or for use in a business. A primary residence does not qualify, and neither does property held primarily for sale, which is how the IRS usually treats a fix-and-flip. Buy-and-hold rentals are the typical 1031 property.

How accurate is this 1031 exchange calculator?

It is a simplified estimate. It taxes all depreciation recapture at 25%, applies one state rate to the whole gain, and estimates boot as the larger of the cash you keep and the amount you trade down. Real exchanges involve details like debt replacement, suspended losses, and state rules, so use it to size the decision and confirm with a CPA and a qualified intermediary.