Defer Capital Gains Taxes with a 1031 Exchange
Estimate your capital gains tax liability and determine the reinvestment requirements to defer 100% of taxes in a like-kind exchange. Includes full tax breakdown, scenario analysis, and a downloadable PDF report.
| Scenario | Replace % of Sale | Min Buy Price | Boot (Taxable) | Tax Owed | Tax Saved | Status |
|---|---|---|---|---|---|---|
| Calculate to see scenarios | ||||||
Calculate to see scenarios
How to Use the 1031 Exchange Calculator in 4 Steps
A complete 1031 tax deferral analysis takes under two minutes. Have your sale price, original purchase documents, depreciation history, and mortgage payoff handy — then model the full tax picture before you call your Qualified Intermediary.
Enter Sale Details
Input your expected sale price, total selling expenses (commissions, title, transfer taxes — typically 6–8% of sale price), and your current mortgage payoff balance. These determine your net sale proceeds and the cash equity you must reinvest to avoid boot.
Enter Your Tax Basis
Provide your original purchase price, capital improvements (not repairs), and total accumulated depreciation claimed on prior tax returns. These three figures calculate your adjusted cost basis — the foundation of your realized gain. Find your depreciation history on IRS Form 4562 from your prior-year tax returns.
Configure Your Tax Rates
Select your federal long-term capital gains rate (0%, 15%, or 20% depending on your income bracket) and enter your state’s capital gains rate. Toggle NIIT on or off based on whether your Modified Adjusted Gross Income exceeds $200,000 (single) or $250,000 (married). The sliders update all metrics instantly as you adjust.
Review Results & Download PDF
Instantly see total tax deferred, depreciation recapture, your minimum replacement property price, and the cash equity you must reinvest for 100% deferral. Explore the reinvestment scenario table to understand the tax impact of partial reinvestment. Click Download PDF to save a professional two-page report to share with your CPA, QI, or real estate attorney.
What the 1031 Exchange Calculator Analyzes
A complete picture of your capital gains tax exposure — broken into every component the IRS considers — plus the exact reinvestment requirements and a scenario analysis showing the tax cost of partial reinvestment.
Total Tax Deferred
The combined federal capital gains tax, state tax, depreciation recapture, and NIIT you would owe if you sold without a 1031 exchange — and the total you preserve by completing the exchange. This is the headline number your calculator surfaces first.
Adjusted Cost Basis & Realized Gain
Your adjusted cost basis is your original purchase price plus capital improvements minus depreciation claimed. The realized gain — the amount subject to tax — is your net sale price minus this adjusted basis. Getting this right is critical; understating depreciation underestimates your tax liability.
Depreciation Recapture (Section 1250)
The IRS taxes previously claimed depreciation deductions at a maximum rate of 25% when you sell — regardless of your capital gains bracket. This often surprises sellers who forget they’ve been deducting $3,600–$9,000+ per year. This calculator shows recapture as a separate line item so the amount is never hidden.
Federal Capital Gains Tax
Long-term capital gains on investment real estate held over one year are taxed at 0%, 15%, or 20% at the federal level depending on your taxable income. This calculator lets you set your exact bracket using a slider so your analysis reflects your real tax situation — not an average.
State Capital Gains Tax
State capital gains rates vary enormously — from 0% in Texas, Florida, and Nevada to over 13% in California. Enter your state’s rate for a complete picture of your total tax liability. Many investors overlook state taxes, which can add thousands to the cost of selling without a 1031 exchange.
NIIT & Reinvestment Requirements
The 3.8% Net Investment Income Tax applies to high earners on top of federal capital gains tax. Beyond taxes, the calculator shows the two reinvestment requirements for 100% deferral: the minimum replacement property price and the cash equity you must reinvest. The scenario table shows the tax cost of undershooting these targets.
U.S. 1031 Exchange Market — Key Statistics
The 1031 Calculator Is Built For You If…
Whether you’re selling your first rental property or optimizing a multi-property portfolio, understanding your exact tax exposure before you close is the difference between a great reinvestment decision and a costly mistake.
Rental Property Sellers
Single-property exchangeYou’ve owned a single-family rental or small multi-family for several years and it has appreciated significantly. You’re considering selling but don’t want to hand 20–30% of your gain to the IRS. This calculator shows you exactly what you’d owe and whether a 1031 exchange makes financial sense for your situation.
- Pull your cumulative depreciation from IRS Form 4562 on your last tax return
- Include all selling costs — not just commission — in the expense field
- Toggle NIIT on if your household income exceeds $250K married / $200K single
- Download the PDF and send it to your CPA before listing the property
Portfolio Investors
Upleg strategy modelingYou’re selling a smaller property to consolidate into a larger one — trading up from a duplex to a 10-unit, or from a single-family portfolio to a commercial building. Run each potential replacement property through this calculator alongside the DSCR Calculator to confirm the upleg meets both your tax deferral and cash flow requirements.
- Model the mortgage boot risk if you’re reducing leverage on the replacement property
- Use the reinvestment scenario table to find your minimum acceptable purchase price
- Compare the effective tax rate on your gain vs. the QI and legal fees of the exchange
- Factor in that depreciation recapture carries over to the replacement property
BRRRR & Repeat Investors
Perpetual tax deferral strategyYou’re executing a long-term wealth-building strategy of perpetual 1031 exchanges — deferring taxes indefinitely while growing your portfolio and potentially eliminating the deferred tax entirely through a step-up in basis at death. Use this calculator to model each exchange leg and ensure you never inadvertently trigger a taxable event.
- Track your carried-over adjusted basis from each exchange for accurate recapture modeling
- Consider a Delaware Statutory Trust (DST) if you want passive replacement property
- Model the “die with it” strategy: deferred taxes vanish with a step-up in basis at death
- Always engage your QI before listing — not after — to protect the exchange timeline
7 Critical Rules for a Successful 1031 Exchange
A 1031 exchange is one of the most powerful tax-deferral tools available to real estate investors — and one of the easiest to disqualify with a procedural mistake. Follow these rules to protect your exchange before you close.
Engage Your QI Before Listing — Not After
Your Qualified Intermediary must be in place before the sale of your relinquished property closes. You cannot receive the proceeds at any point — doing so, even briefly, disqualifies the entire exchange. Contact your QI when you accept an offer, not at closing. Many experienced investors engage a QI before they even list the property.
The 45-Day Clock Starts at Your Closing — Not Identification
Many investors misread the rules and believe they have 45 days from when they identify a property. In reality, both clocks — 45 days to identify and 180 days to close — start the moment your relinquished property closes. If you close in late November, you’ll identify in early January and must close your replacement by late May. Plan your exchange timeline backwards from your relinquished property closing date.
Avoid Cash Boot — Reinvest Every Dollar
Any cash you take out of the exchange — even a small amount — is taxable as boot. To achieve 100% deferral, your replacement property must cost at least as much as your net sale price AND you must reinvest all cash equity. Use this calculator’s reinvestment scenario table to see exactly how much tax each dollar of boot generates, so you can decide whether partial deferral makes sense for your situation.
Watch for Mortgage Boot — Don’t Reduce Debt
Mortgage boot is the most overlooked exchange mistake. If you sell a property with $400,000 in debt and buy a replacement with only $300,000 in debt, the $100,000 reduction in mortgage is treated as taxable boot — even if you reinvested every dollar of cash. To avoid mortgage boot, assume at least as much debt on the replacement property as you had on the relinquished property, or add cash to compensate for the difference.
Identify Up to 3 Properties — But Follow the Rules
The IRS allows you to identify up to three potential replacement properties of any value (the 3-property rule) within your 45-day window. You may identify more under the 200% rule (total FMV of all identified properties cannot exceed 200% of the relinquished property value) or 95% rule (you must close on 95% of the identified properties’ value). Most investors use the 3-property rule and identify a primary choice plus two backups in case the first falls through.
Account for the Full Tax Picture — Not Just Cap Gains
Many investors focus only on the federal capital gains rate and underestimate their true tax bill. A complete analysis includes depreciation recapture at up to 25%, your state capital gains rate, and the 3.8% NIIT if you’re a high earner. On a property with $300,000 in accumulated depreciation, recapture alone could cost $75,000 — more than the federal capital gains tax on the same deal. This calculator breaks out all four components so you see the full picture.
Verify Your QI is Bonded, Insured, and Properly Capitalized
QI failures — including fraud and insolvency — have cost investors millions in lost exchange funds. Your QI should hold your exchange funds in a separate, titled qualified trust account (not commingled with operating funds), carry fidelity bonds and errors & omissions insurance, and ideally be a member of the Federation of Exchange Accommodators (FEA). Ask for proof of bonding and insurance before wiring your sale proceeds to any QI.
1031 Exchange Calculator — Frequently Asked Questions
Everything you need to know about interpreting this calculator’s results, understanding the tax components, and what the IRS requires for a valid like-kind exchange.
Important disclaimer: All figures produced by the HomeExpertly 1031 Exchange Calculator are for educational and estimation purposes only and do not constitute financial, investment, legal, or tax advice. Results are based entirely on the inputs you provide and standard mathematical formulas — actual tax liability will vary based on your complete tax situation, holding period, property classification, state and local tax laws, prior depreciation deductions, applicable exclusions, and the specific terms of your exchange. This tool does not account for short-term capital gains rates (if the property was held under one year), state conformity with federal 1031 rules (some states do not conform), installment sale treatment, partial exchange scenarios involving mixed-use property, or the impact of depreciation recapture on the replacement property’s tax basis. A 1031 exchange involves strict IRS procedural requirements — failure to meet the 45-day identification or 180-day closing deadline, or receiving boot, can trigger immediate tax liability. Always consult a licensed Qualified Intermediary, certified public accountant, real estate attorney, and/or financial advisor before initiating a 1031 exchange. HomeExpertly is not a licensed QI, tax professional, investment advisor, or financial planner.