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1031 Exchange Calculator (2026)
Calculate capital gains tax deferred through a 1031 like-kind exchange, determine if you have boot, and find the minimum replacement property value required to defer all taxes.
🔄 1031 Exchange Calculator
Relinquished Property (Property You Are Selling)
Your original cost basis
Total depreciation taken over ownership
Agent commissions, closing costs ~6%
0% for TX, FL, NV, WA (no state income tax)
IRS rate is 25% on recaptured depreciation
Replacement Property (Property You Are Buying)
Must be ≥ relinquished property sale price to defer all gains
Must be ≥ old mortgage to avoid mortgage boot
How a 1031 Exchange Works
Under IRS Section 1031, when you sell an investment property and reinvest the proceeds into a like-kind replacement property, you can defer all capital gains taxes and depreciation recapture. Taxes are not eliminated — they are deferred until you eventually sell the replacement property without doing another 1031 exchange.
To defer 100% of taxes:
- Replacement property value must equal or exceed the relinquished property's sale price
- All net equity must be reinvested (no cash kept = no cash boot)
- New mortgage must equal or exceed old mortgage (no mortgage boot)
- Use a Qualified Intermediary (QI) — you cannot handle the proceeds yourself
- Meet the 45-day identification and 180-day closing deadlines
Boot is any portion of the exchange that is not like-kind — cash kept or net mortgage reduction. Boot is taxable in the exchange year at ordinary or capital gains rates.
Importantly, under IRC §1031(b), the taxable ("recognized") gain in a partial exchange is the lesser of your total realized gain or the total boot received — not a proportional slice of your gain across the full sale price. Depreciation recapture is recognized first (up to the recognized-gain amount), with any remainder taxed as long-term capital gain. This calculator applies that rule directly.
Frequently Asked Questions
What is a 1031 exchange?
A 1031 exchange lets you defer capital gains and depreciation recapture taxes when selling investment real estate by reinvesting into a like-kind replacement property. Taxes are deferred — not eliminated — until you sell the replacement property without another exchange.
What is boot in a 1031 exchange?
Boot is any non-like-kind value received — most commonly cash you keep from the sale, or a net reduction in mortgage balance. Boot is taxable immediately, with depreciation recapture recognized first. To avoid boot entirely, reinvest all proceeds and take on equal or greater debt on the replacement property.
What are the 1031 exchange deadlines?
Day 45: Identify up to 3 replacement properties in writing. Day 180: Close on the replacement property. Both deadlines run from the sale closing date and are strictly enforced — no extensions are granted except in federally declared disaster areas.
What qualifies for a 1031 exchange?
Properties must be held for investment or productive use in a trade or business. Eligible properties include rental homes, commercial buildings, vacant land, and industrial property. Personal residences do not qualify. Since 2018, only real property qualifies — personal property (equipment, vehicles) no longer qualifies under Section 1031.
Can I do a 1031 exchange on my primary residence?
No. Section 1031 applies only to property held for investment or business use. Primary residences qualify for the Section 121 exclusion instead ($250,000/$500,000 capital gains exclusion). Some investors convert a rental to primary residence before selling, but specific rules apply.
What happens if I miss the 45-day or 180-day deadline?
The exchange is disqualified retroactively, and the sale is treated as a normal taxable sale — you owe capital gains and depreciation recapture tax on the full realized gain, generally in the year the relinquished property sold. There is no partial credit for progress made. The only common exception is a federally declared disaster affecting the transaction. This is why experienced investors identify backup properties well before day 45.
Can I convert the replacement property into my primary residence later?
Yes, but not immediately, and specific rules apply. The IRS generally expects the replacement property held for investment for a meaningful period (many practitioners use a 1-2 year rule of thumb) before converting it to personal use. If you later sell after living in it, Section 121's home-sale exclusion may only apply to the portion of ownership and gain attributable to personal use. Get advice from a CPA before relying on this strategy.
What happens to the deferred tax if I never sell, or pass the property to my heirs?
This is the strategy often called "swap until you drop." If you keep exchanging properties for life and never sell outright, your heirs typically inherit the final property with a stepped-up basis equal to its fair market value at your death — potentially eliminating the deferred capital gains and depreciation recapture entirely. This makes 1031 exchanges a common estate-planning tool, not just a short-term tax deferral trick.
Can I exchange one property for multiple replacement properties, or combine several into one?
Yes. You can exchange a single relinquished property into up to three replacement properties (or more, under specific identification rules), or combine multiple relinquished properties into one larger replacement property. The same 45-day identification and 180-day closing deadlines apply, and the combined replacement value must still meet or exceed your total net sale proceeds to defer all tax.
Does the replacement property have to be titled in the same name as the relinquished property?
Yes — this is one of the most common ways exchanges accidentally fail. The same taxpayer who sold must take title to the replacement property. If you owned it personally, you generally can't take title in an LLC or different entity without risking disqualification. Single-member LLCs treated as "disregarded entities" are typically fine, but always confirm with your Qualified Intermediary and CPA before closing.