1031 Exchange Calculator
Calculate tax savings from IRS Section 1031 like-kind property exchange for real estate investors.
Relinquished Property (Sold)
Residential: ~$36K/year per $1M. Commercial: varies by useful life.
Replacement Property
Use exchange funds for improvements to meet value requirement
Gain Calculation
Sale Price$$500000.00
Adjusted Basis (Purchase - Depreciation)$$150000.00
Realized Gain$$350000.00
Depreciation Recapture (25%)$$50000.00
Capital Gain Portion$$300000.00
Tax Without 1031 Exchange
Recapture Tax (25%)$$12500.00
Federal Capital Gains (20%)$$60000.00
State Capital Gains$$27900.00
Total Tax (No Exchange)$$100400.00
1031 Exchange Results
Replacement Total
$$550000.00
Value Requirement
Met
Deferred Gain
$$350000.00
Tax Savings
$$100400.00
Full Tax Deferral Achieved
Replacement property ($$550000.00) meets or exceeds sale price ($$500000.00). All $$350000.00 gain deferred. New basis: $$200000.00. Future tax liability when replacement sold: ~$$102550.00.
Timeline Requirements
Identification Deadline
45 days from sale
Identify up to 3 properties (or more with rules)
Closing Deadline
180 days from sale
Must close on replacement property
Sell first, identify replacement within 45 days, close within 180 days.
Key 1031 Rules
Like-kind: Real estate for real estate (any type). Value requirement: Replacement must equal or exceed sale price. Proceeds requirement: All cash must be reinvested. Qualified Intermediary (QI) required: Cannot touch funds directly. No personal use properties. Depreciation recapture: May apply if new property has less depreciation. State rules: Some states (CA) track deferred gain for future tax.
1031 Exchange Benefits
Defer 100% capital gains tax. Defer depreciation recapture (25%). Leverage equity into larger property. Portfolio rebalancing without tax cost. Estate planning: Heirs inherit at market value (step-up basis eliminates deferred gain). Unlimited exchanges allowed. Combine multiple properties into one (or vice versa).