Get The Ultimate
‍1031 Exchange Calculator.

Want to understand the math behind capital gains from the sale of your investment property? Interested in going deep on the amount of taxes you’ll defer by doing a 1031 exchange? Or what about understanding the reinvestment required to take advantage of full tax deferral on your 1031?

From capital gains calculations to 1031 tax deferment to detailed scenario analysis of 1031 exchange savings you get from hiring 1031 Specialists, our Excel model has it all. Just fill out this simple form, then check your email.

1031 Exchange Calculator: Estimate Taxes, Boot, Basis & Savings
‍‍
Adjusted basis = Original cost + improvements − accumulated depreciation.
Total gain (if sold, no exchange) = Adjusted selling price − adjusted basis.
Tax components (if sold):
Long-term capital gains (rate generally 0/15/20% depending on income).
Section 1250 depreciation recapture (up to 25% of prior depreciation).
State income tax (varies by state).
Possible 3.8% NIIT (income-dependent).

To fully defer: Buy replacement property(ies) worth ≥ adjusted selling price and reinvest all net cash (no cash out), replacing equal or greater debt.
Any shortfall creates boot that’s taxable (recapture first, then capital gain).

How do you calculate a 1031 exchange to pay no tax?
‍Pass two tests:
(1) Purchase price test—buy at least the adjusted selling price,
(2) Cash test -> reinvest all net cash and replace any paid-off debt with new debt or new cash.

1. How do you calculate a 1031 exchange?
Compute your total gain if sold: adjusted sales price − adjusted basis.
To fully defer tax, buy equal or greater value than your adjusted sales price, reinvest all net cash, and replace any paid-off debt with new debt or cash.
Shortfalls create taxable boot.
Standard timing: identify within 45 days, close within 180 days, using a qualified intermediary.

2. How do I accurately determine the "adjusted basis" of my property for the calculator?

The adjusted basis is a crucial starting point for any capital gains calculation. It is not simply the original purchase price.
The correct formula is: Adjusted Basis = (Original Purchase Price) + (Capital Improvements) - (Accumulated Depreciation)
‍
Original Purchase Price:
This is what you paid for the property, including certain closing costs like legal fees and recording fees.
‍Capital Improvements:
These are costs for permanent upgrades that increase the property's value or extend its life, such as a new roof, a room addition, or a new HVAC system. Routine repairs and maintenance do not count.
‍Accumulated Depreciation:
This is the total amount of depreciation deductions you have claimed on your tax returns over the years you have owned the property. This is a critical component, as it reduces your basis and therefore increases your potential capital gain.
A calculator will require this final adjusted basis number to accurately compute your potential gain.

3. What is the difference between "realized gain" and "recognized gain" as shown in the results?
Understanding this distinction is the key to understanding the purpose of a 1031 exchange.
‍Realized Gain: This is your total, on-paper profit from the sale.
A calculator computes this as:
(Sale Price)−(Adjusted Basis)−(Selling Expenses)=Realized Gain
This is the amount of profit that could be taxed.
‍
‍Recognized Gain: This is the portion of your realized gain that is taxable in the current year.
‍
In a successful 1031 exchange where all rules are followed, the recognized gain is $0. The primary function of a 1031 exchange calculator is to show you how to structure your exchange to keep the recognized gain at zero. If the calculator shows a recognized gain, it is because of "boot."

4. What exactly is "boot" and how does the calculator show its tax consequences?
‍
‍Boot is a term for any property you receive in an exchange that is not "like-kind." Receiving boot does not necessarily disqualify the exchange, but it almost always makes some portion of your gain taxable. A calculator is designed to identify and quantify the tax impact of boot.
‍
There are two main types:
‍Cash Boot: This is the most straightforward. It is any cash you receive and keep from the sale proceeds. For example, if your sale proceeds are $500,000 but you only reinvest $480,000 into the new property, you have $20,000 of cash boot.
‍
‍Mortgage Boot (or Debt Relief): This occurs if the mortgage on your new replacement property is less than the mortgage you had on the old property you sold.
For example, if you paid off a $200,000 loan on your old property but only took on a $150,000 loan for the new one, you have received $50,000 in mortgage boot.
Any boot you receive is considered a recognized gain and is taxed, up to the total amount of your realized gain.

5. How does the calculator handle loans and debt in an exchange?
‍
To fully defer all capital gains tax, you must follow two fundamental rules that a calculator's logic is based on:
‍Reinvest All Equity: The purchase price of your new property must be equal to or greater than the net selling price of your old property.
‍Replace All Debt: The mortgage on the new property must be equal to or greater than the mortgage on the old property.
If you get a new loan that is smaller than the old one, the difference is considered mortgage boot (as explained above) and becomes taxable. You can offset this by adding an equivalent amount of your own cash to the purchase, but you cannot simply take the debt relief tax-free.

6. What is the "new basis" for the replacement property, and why is it important?

The 1031 exchange is a tax-deferral strategy, not a tax-elimination one.
The capital gains tax does not disappear; it is pushed forward to a future sale.
The calculator determines your "new basis" to show how this works.
‍
The formula:
(Purchase Price of New Property)-(Deferred Gain from the Exchange)=New Basis
‍
This new, lower basis is important because when you eventually sell the replacement property (without another 1031 exchange), your capital gain will be calculated using this lower starting point, leading to a larger taxable gain at that time.

‍