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1031 Exchange Calculator

Calculate how much tax you can defer with a like-kind exchange

Relinquished Property (Selling)
$
$
$
Replacement Property
$
Tax Rates
%
typically 25%
%
Tax Deferred
$43,750Moderate Savings
Total tax avoided through 1031 exchange
Total Gain
$255,000
sale price − adjusted basis
Capital Gains Tax
$30,000
at 15% rate
Depreciation Recapture
$13,750
$55,000 at 25%
Boot (Taxable)
$0
No boot — fully deferred
Tax Breakdown
Sale Price$500,000
Adjusted Basis$245,000
Total Gain$255,000
Capital Gains Tax$30,000
Depreciation Recapture Tax$13,750
Total Tax Without 1031$43,750
Boot Tax Owed$0
Tax Deferred$43,750
IRS Timeline Requirements
45 days to identify replacement property. 180 days to close on it. Both deadlines start from the sale date and are strictly enforced.

How a 1031 Exchange Works

A 1031 exchange (named after Section 1031 of the Internal Revenue Code) lets you defer capital gains taxes when you sell an investment property and reinvest the proceeds into a "like-kind" replacement property. The key word is defer — you're not eliminating the tax, you're pushing it into the future.

Boot is the portion of proceeds you don't reinvest. If your replacement property costs less than your sale price, the difference is "boot" and is taxable. To fully defer taxes, the replacement property must be equal or greater in value.

Depreciation recapture is taxed at 25% (not your regular capital gains rate). This applies to any depreciation you've claimed on the property. It's often the largest component of the tax bill on a sale.

All funds must flow through a Qualified Intermediary — you can never take constructive receipt of the money. Breaking the chain invalidates the exchange.

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