1031 Exchange Calculator
Plan your 1031 tax deferral.
What is a 1031 Exchange?
A 1031 exchange is a transaction under IRC §1031 that lets you sell investment/business real estate and defer capital-gains and depreciation-recapture taxes by reinvesting into like-kind U.S. real estate. To fully defer, you must use a Qualified Intermediary, identify replacement property within 45 days, close within 180 days, buy equal or greater value, reinvest all equity, and replace any debt (or add cash). Taxes aren’t forgiven—any cash or debt shortfall (“boot”) is taxable, and the deferred gain carries into the new property’s basis until a non-1031 sale (or step-up at death).
Key Rules & Timeline
You must identify replacement property in writing within 45 days and close within 180 days (or by your tax return due date), and a Qualified Intermediary must hold the proceeds.
To fully defer taxes, buy equal or greater value, reinvest all equity, and replace any debt with new debt or cash to avoid taxable boot.
The same taxpayer must take title and hold for investment/business use, and identifications must follow the 3-Property/200%/95% rules precisely.
Is 1031 Right for This Deal?
A 1031 usually fits when you have a large unrealized gain and want to scale or reposition into equal-or-greater-value investment property.
It’s less attractive if you need cash, are buying much smaller, or can’t meet the 45/180-day and debt-replacement requirements.
Compare Net Cash (Sell Now) vs Net Cash (1031) in your calculator; if the exchange wins and you can comply, involve a Qualified Intermediary and your CPA before listing.
FAQ
What does this calculator compare?
It shows Sell Now vs. 1031 Exchange: taxes due today, Net Cash (Sell Now), Net Cash (1031), Taxes Deferred, and minimum Replacement Value/New Debt.
Which inputs do I need?
Sale Price, Adjusted Basis, Mortgage Payoff, Selling Costs ($), Effective Tax Rate (%).
How do I estimate Adjusted Basis?
Purchase + Improvements + Buyer basis costs − Depreciation − Insurance/Casualty recoveries. (See your depreciation schedule/Form 4562 or your CPA.)
What should I enter for Selling Costs ($)?
Your best estimate of commissions, escrow, title, transfer/recording, and attorney fees tied to the sale.
What Effective Tax Rate should I use?
Use a blended % for LTCG + depreciation recapture + state/NIIT. Typical range 18–28% (use 22% if unsure; raise it if you’ve taken heavy depreciation or are in a high-tax state).
What is Net Selling Price?
Sale Price − Selling Costs ($). The calculator uses this to set Min Replacement Value.
Why is the Min Replacement Value not my original purchase price?
To fully defer, you must buy ≥ Net Selling Price (sale minus selling costs), not what you originally paid.
Do I have to replace my debt?
Yes—either take on new debt or add cash equal to the mortgage payoff. Shortfalls create a mortgage boot (taxable).
What is “boot,” and does the calculator show it?
Boot is cash kept or debt not replaced—it’s taxable. The simple calculator assumes full deferral and shows the thresholds (Min Replacement Value/Min New Debt) to avoid boot.
Can I buy multiple replacement properties?
Yes. Totals must meet value/equity/debt requirements. Identification must follow the 3-Property / 200% / 95% rules.
Does this account for state taxes and NIIT (3.8%)?
Yes—roll them into your Effective Tax Rate input.
Does a 1031 eliminate taxes forever?
No—defers them. If you sell later without another 1031, taxes are due. A step-up in basis at death may eliminate the deferred gain.
What if my gain is zero or negative?
Taxes due today are $0; the calculator clamps negative gain to zero. A 1031 may not be necessary.
Can I use this for a primary residence or flips?
No. 1031 applies to investment/business real estate held for productive use (not primary homes or dealer property).
What breaks a 1031?
Missing 45-day identification or 180-day closing, touching the funds (no QI), buying less than the required value/equity/debt, or sloppy written identification.
Disclaimer
The 1031 Exchange Calculator provided by KARE – Investment Sales & Leasing is for informational and educational purposes only. Results are estimates based solely on the data you enter and simplified assumptions; they do not reflect advice or a guarantee of tax outcomes. This tool does not account for all factors that may affect an exchange, including but not limited to state/local taxes, NIIT, identification rules (3-Property/200%/95%), reverse/improvement exchanges, related-party limits, passive loss and at-risk rules, basis/boot nuances, or future changes in law. KARE is not acting as a Qualified Intermediary, tax advisor, accountant, or attorney, and this tool is not an offer to buy/sell real estate. 1031 eligibility generally requires investment/business real estate, use of a Qualified Intermediary, written identification by Day 45, closing by Day 180, purchase of equal or greater value, reinvestment of all net equity, and replacement of debt; failure may create taxable boot. You should consult a CPA/Qualified Intermediary/attorney before taking any action. By using this calculator, you acknowledge and agree that KARE – Investment Sales & Leasing is not responsible for decisions made or actions taken in reliance on these results.
