1031 Exchange Calculator 2026 β Tax Deferral Estimator
Calculate how much capital gains tax you defer with a 1031 like-kind exchange. See boot, deferred gain, new property basis and comparison with no-exchange scenario.
Relinquished Property (Sold)
$
Gross sale price of old property $
Original cost + improvements β depreciation $
Commissions, closing costs, fees $
Remaining loan balance on old property Replacement Property (Bought)
$
Purchase price of new property $
New loan taken on replacement property $
Extra cash you put into the deal $
Total depreciation deducted over holding period Your state's capital gains rate
$0
Tax Deferred
$0
Realized Gain
$0
Boot (Taxable Now)
$0
New Property Basis
Step-by-Step Exchange Calculation
1031 Exchange vs. No Exchange Comparison
| Scenario | Tax Owed Now | Net Equity Reinvested | Outcome |
|---|
How to Use This 1031 Exchange Calculator
Enter the details of your relinquished property (the one you're selling) and your replacement property (the one you're buying). The calculator determines your realized gain, any taxable boot, the amount of gain deferred, and your tax deferred. It also calculates the new cost basis in the replacement property.
The Formula
Realized Gain = Sale Price β Adjusted Basis β Selling Costs
Boot = (Old Mortgage Relief + Cash Received) β (New Mortgage + Cash Invested)
Taxable Boot = max(0, Boot)
Deferred Gain = Realized Gain β Taxable Boot
Tax Deferred = Deferred Gain Γ (LTCG Rate + State Rate) + Depreciation Γ 25%
New Basis = Replacement Price β Deferred Gain
Boot = (Old Mortgage Relief + Cash Received) β (New Mortgage + Cash Invested)
Taxable Boot = max(0, Boot)
Deferred Gain = Realized Gain β Taxable Boot
Tax Deferred = Deferred Gain Γ (LTCG Rate + State Rate) + Depreciation Γ 25%
New Basis = Replacement Price β Deferred Gain
Example
Property sold for $800K, basis $300K, selling costs $48K, old mortgage $200K, new property $1M, new mortgage $400K:
Realized gain: $800K β $300K β $48K = $452,000
Boot: ($200K relief + $0 cash) β ($400K + $0) = β$200K β no boot (negative means you added equity)
Deferred gain: $452,000
Tax deferred at 15% + 5% + 25% recapture on $50K depreciation: $452K Γ 20% + $50K Γ 25% = $90,400 + $12,500 = $102,900 deferred
New basis: $1,000,000 β $452,000 = $548,000
Realized gain: $800K β $300K β $48K = $452,000
Boot: ($200K relief + $0 cash) β ($400K + $0) = β$200K β no boot (negative means you added equity)
Deferred gain: $452,000
Tax deferred at 15% + 5% + 25% recapture on $50K depreciation: $452K Γ 20% + $50K Γ 25% = $90,400 + $12,500 = $102,900 deferred
New basis: $1,000,000 β $452,000 = $548,000
Extended
Multiple Exchange Chain Analyzer
See how deferring through 2β3 sequential exchanges compounds your tax savings over time
Model a chain of up to 3 sequential 1031 exchanges and see how compounding deferral builds wealth. All figures use 15% LTCG + 5% state rate.
| Exchange # | Sale Price | Gain | Cumulative Deferred Tax | Equity Reinvested |
|---|
* Final sale (no further exchange) triggers tax on all accumulated deferred gains.
Frequently Asked Questions
What is a 1031 exchange and how does it defer taxes?
A 1031 exchange (named after Section 1031 of the IRS tax code) allows real estate investors to defer capital gains tax when they sell a property and reinvest the proceeds into a "like-kind" replacement property. Instead of paying tax on the gain now, the gain is carried forward into the new property's cost basis. The tax is only due when you sell the replacement property without doing another exchange.
What is "boot" in a 1031 exchange?
Boot is any non-like-kind property received in a 1031 exchange β including cash, debt relief, or other property. If you receive boot, that portion is taxable. Mortgage boot occurs when the debt on your old property exceeds the debt on your new property (net mortgage relief). Cash boot is money you pocket from the sale rather than reinvesting. To maximize deferral, you must replace all your equity and all your debt.
What are the 45-day and 180-day 1031 exchange rules?
You have 45 calendar days from the sale of your relinquished property to identify potential replacement properties (you can identify up to 3). You then have 180 calendar days from the sale to close on one of the identified replacement properties. Both deadlines are firm β missing either deadline disqualifies the exchange and makes the entire gain taxable.
Can I do a 1031 exchange on my primary residence?
No. Section 1031 applies only to investment and business property, not personal residences. However, you can combine strategies: first convert your primary residence to a rental property (typically for 2 years), then do a 1031 exchange. Alternatively, use the Section 121 exclusion ($250K/$500K for couples) on the primary residence portion of a mixed-use property.
What is the new basis in the replacement property after a 1031 exchange?
Your new property's adjusted basis equals the replacement property's purchase price minus the deferred gain. This is called a "substituted basis." It means the deferred gain is embedded in the new property β when you eventually sell without exchanging, the lower basis creates a larger taxable gain. The new basis determines future depreciation deductions on the replacement property.