1031 Exchange Calculator
See capital gains tax deferred with a 1031 exchange, boot exposure, and the minimum replacement property value and debt to defer the full gain.
100% client-side. US federal estimates using 2025 IRS brackets (retrieved 2026-05-18). Inputs stay in your browser (ons-1031-exchange-inputs).
This is a simplified estimate. 1031 rules are complex. Always work with a Qualified Intermediary and tax advisor.
Tax deferred
$49,120
Tax without 1031
$49,120
Full deferral: no boot detected on this scenario
Gain on sale
$240,000
Tax deferred
$49,120
Boot amount
$0
Net proceeds (with 1031)
$250,000
Without 1031: $200,880
Avoid all boot
To defer tax on the full gain, buy at least $400,000 in replacement property and take on at least $150,000 in new debt.
Tax without 1031 exchange
- Depreciation recapture (25%)$10,000
- Long-term capital gains (15%)$30,000
- NIIT (3.8%)$9,120
- Total tax$49,120
Adjusted basis $160,000. LTCG rate applied: 15% (NIIT applies).
1031 boot analysis
- Equity boot$0
- Mortgage boot$0
- Taxable boot gain$0
- Tax on boot$0
Relinquished property
Tax profile
Replacement property
How this tool works
A 1031 exchange lets US real estate investors sell one investment property and roll the proceeds into a replacement property without paying capital gains tax at the time of sale. The calculator first computes what you would owe in taxes if you sold without a 1031 exchange. It then computes the boot in your proposed exchange, which is any value you receive that is not like-kind property: cash, debt relief, or the difference if your replacement property is cheaper than your sale price.
Worked example
Purchase price: $200,000. Depreciation taken: $40,000. Net sale price: $400,000. Existing mortgage: $150,000. Filing status: married filing jointly. Taxable income (excluding this gain): $150,000 (15% capital gains rate applies). Replacement property value: $450,000. New loan: $200,000. Adjusted basis: $160,000. Gain on sale: $240,000. Boot equals $0 with full deferral of $40,000 tax.
Frequently asked questions
What is a 1031 exchange?
A 1031 exchange is a tax-deferral strategy that lets US investors sell one investment property and buy a like-kind replacement without recognizing the capital gain at the time of sale. The gain carries into the replacement property's basis and is taxed when that property is eventually sold without another exchange. The tax is deferred, not eliminated.
What is boot in a 1031 exchange?
Boot is any non-like-kind value you receive in the exchange: cash left over, net debt relief (your old loan was bigger than your new one), or buying a cheaper replacement property. Boot is taxable in the year of the exchange, up to your realized gain. Keeping zero cash and buying at least as much property with at least as much debt eliminates boot entirely.
How do I avoid all boot?
Two conditions must both be true: your replacement property value must be at least equal to your net sale price, and the debt on your replacement property must be at least equal to your existing mortgage being paid off. If either condition fails, the shortfall becomes boot. Run this calculation for a range of purchase prices and rent assumptions to understand the sensitivity of your returns.
What is depreciation recapture and why is the rate 25%?
Depreciation recapture requires you to pay tax on all the depreciation deductions you claimed over your holding period at a flat 25% rate (IRS Section 1250 unrecaptured gain). This applies even in a 1031 exchange if boot is received, because any boot is first allocated to the recapture gain before applying to long-term capital gain.
Does a 1031 exchange eliminate the tax forever?
No. The tax is deferred into the replacement property's adjusted basis. When you eventually sell without doing another exchange, the full accumulated gain (including all deferred amounts) becomes taxable. Many investors chain multiple 1031 exchanges and ultimately pass the property to heirs, who receive a stepped-up basis at death, potentially eliminating the gain entirely.
What is a Qualified Intermediary and do I need one?
Yes. IRS rules require you to use a Qualified Intermediary (QI) to handle the exchange funds. You cannot receive the sale proceeds yourself, even briefly, or the exchange is disqualified. The QI holds the proceeds from your sale and transfers them to purchase the replacement property. Do not attempt a 1031 exchange without a licensed QI.