A 1031 exchange calculator estimates how much capital gain you can defer when you sell investment real estate and buy a replacement property, and how much becomes taxable “boot.” Formula: Gain=sale−basis−costs; boot from cash, mortgage relief, equity shortfall; deferred=gain−boot. If you sell for $800,000 with a $350,000 gain and reinvest all $450,000 of equity into a $900,000 property, the full $350,000 is deferred.
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How to use the 1031 exchange calculator
- Enter the sale price, adjusted basis, mortgage and selling costs of the property you are selling.
- Enter the replacement price and new mortgage.
- Enter any cash you plan to take out and your capital gains tax rate.
- Read the realized gain, taxable boot, estimated tax and deferred gain.
What formula does the 1031 exchange calculator use?
- Realized gain = sale price − adjusted basis − selling costs
- Cash boot = cash you take out, or equity not reinvested, whichever is larger
- Mortgage boot = old mortgage − new mortgage − extra cash you add (not below 0)
- Taxable gain = cash boot + mortgage boot, up to the realized gain
- Deferred gain = realized gain − taxable gain
To defer all of the gain, buy replacement property of equal or greater value, reinvest all the net equity, and replace any debt paid off with new debt or added cash.
H31 exchange calculator worked example
A rental with a $400,000 adjusted basis sells for $800,000 with $50,000 of selling costs and a $300,000 mortgage, so the realized gain is $350,000 and the net equity is $450,000:
| Replacement | New mortgage | Boot | Deferred gain |
|---|---|---|---|
| $900,000 | $450,000 | $0 | $350,000 |
| $700,000 | $200,000 | $50,000 (debt relief $100,000 less $50,000 cash added) | $300,000 |
| $600,000 | $250,000 | $150,000 ($100,000 cash + $50,000 debt relief) | $200,000 |
In the second row you add $50,000 of your own cash, which offsets part of the $100,000 drop in debt. At a 15% capital gains rate, $50,000 of boot would mean about $7,500 of federal tax, plus any depreciation recapture and state tax.
Key 1031 exchange rules
- Since 2018, only real property held for business or investment qualifies; your main home and property held mainly for resale do not.
- You must identify replacement property within 45 days of selling and receive it within 180 days (or by your tax return due date, if earlier).
- You cannot take receipt of the sale proceeds; a qualified intermediary usually holds them.
- The exchange is reported on IRS Form 8824.
Basis in the new property
The deferred gain is not forgiven. It carries into the replacement property through a lower basis, so depreciation is smaller and the gain can be taxed when you sell later without another exchange. Keep the closing statements from both sides of the exchange to work out the new basis.
What the 1031 exchange calculator leaves out
It does not split boot between depreciation recapture and capital gain, does not include state taxes, and treats all selling costs as reducing the gain. Related-party exchanges, reverse exchanges and partial personal use have extra rules. Treat the 1031 exchange calculator as a planning estimate, and work with a qualified intermediary and a tax professional before you sell.
Estimates for education only, not tax, legal or financial advice. Check current rules with the tax authority or a qualified adviser.
Boot and partial exchanges
An exchange defers all the gain only if you reinvest all the net proceeds and take on at least as much debt as you paid off, or add cash to make up the difference. Anything else you receive is called boot, which a 1031 exchange calculator should treat separately, and it is taxable up to the amount of your gain.
Here is a 1031 exchange calculator example. Say you sell a rental for $600,000 with a $200,000 mortgage and buy a replacement for $550,000. If you keep the $50,000 difference as cash, that $50,000 is boot. Debt counts too: if the old mortgage was $200,000 and the new one is $150,000, the $50,000 of debt relief is also boot unless you add $50,000 of your own cash. A 1031 exchange calculator assumes a full exchange, so reduce the deferred gain by any boot you expect. A qualified intermediary or tax adviser should confirm the figures before closing.
Related converters and calculators
Related calculators:
- Capital gains on home sale calculator: main home
- Rental property calculator: cash flow
- Depreciation calculator: basis
- Rent vs sell calculator: keep or sell
Sources
IRS: Like-kind exchanges – real estate tax tips; IRS: About Form 8824; IRS Publication 544: Sales and Other Dispositions of Assets.
Questions about this calculator
What is boot in a 1031 exchange?
Cash or debt relief you receive that is not reinvested. It is taxable up to the realized gain.
What are the 1031 deadlines?
Identify replacement property within 45 days and complete the purchase within 180 days of the sale.
Can I do a 1031 exchange on my home?
No. Only real property held for business or investment qualifies.
Does adding cash offset a smaller mortgage?
Yes. Cash you add to the purchase offsets debt relief.
Which form reports a 1031 exchange?
IRS Form 8824, Like-Kind Exchanges.
Check the assumptions and units before relying on a result. Financial, tax and health estimates do not replace advice for your individual circumstances.
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