1031 Exchange Calculator
Calculates your realized gain, taxable boot (mortgage and cash), recognized gain, depreciation recapture, and total tax deferred by completing a 1031 exchange instead of selling outright — plus your 45-day identification and 180-day closing deadlines based on your actual sale date. Built for real estate investors evaluating whether a 1031 exchange makes sense for their specific numbers, without handing over an email address to a qualified intermediary's sales funnel first.
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Get the Excel spreadsheet behind this calculator to use offline, customize for your needs, and publish as a web tool using Sheetflow.
Mortgage Boot vs. Cash Boot
Calculates mortgage boot and cash boot separately instead of lumping them into one number, so you can see exactly which part of your exchange is triggering immediate tax.
Correct Recapture-First Tax Ordering
Applies recognized gain to depreciation recapture at 25% before any of it reaches lower capital gains rates, matching how the IRS actually taxes a boot-triggering exchange.
45-Day and 180-Day Deadlines
Calculates your identification and closing deadlines directly from your actual relinquished property sale date, both running from the same closing day.
Frequently Asked Questions
What is a 1031 exchange and how much tax can it actually defer?
A 1031 exchange lets you defer capital gains tax and depreciation recapture tax when you sell an investment property and reinvest the proceeds into a "like-kind" replacement property, provided you follow strict IRS timing and structuring rules. The tax isn't eliminated — it's deferred until you eventually sell without doing another exchange — but that deferral can be substantial and can compound if you keep exchanging over time.
Using the calculator's defaults: a property sold with a $264,000 realized gain would trigger $47,600 in tax if sold outright. Structuring the transaction as a 1031 exchange — even one that isn't perfectly "clean" — brings that down to $5,000 in immediate tax, deferring $42,600. That's real money kept working in the replacement property instead of going to the IRS this year.
What is "boot" in a 1031 exchange, and why does it get taxed immediately?
Boot is anything of value you receive in the exchange that isn't like-kind real property — cash you pocket, or debt relief you don't replace with equivalent new debt. The IRS treats boot as if you'd sold that portion outright, so it's taxed in the year of the exchange even though the rest of your gain defers.
There are two kinds, and they're calculated differently. Mortgage boot is the excess of your old mortgage balance over your new mortgage balance — if you had $200,000 of debt on the property you sold but only take on $180,000 on the replacement, that $20,000 gap is boot, because you were relieved of debt you didn't replace. Cash boot is any net cash you pull out of the exchange instead of reinvesting into the replacement property. Using the calculator's defaults, buying down in debt by $20,000 (even while reinvesting all the cash) creates $20,000 of mortgage boot — and that's true even though no cash actually changed hands into the investor's pocket.
Why is depreciation recapture taxed before capital gains, and why does it matter which comes first?
Because depreciation recapture (taxed under Section 1250 at up to 25% federally) and long-term capital gains (commonly taxed at 15-20% federally) are different tax categories, and the IRS applies recognized gain to recapture first, before any of it can be treated as a lower-taxed capital gain. This ordering matters because it usually means your first dollars of recognized gain get hit with the higher rate, not the lower one.
Using the calculator's defaults: $20,000 of recognized gain from mortgage boot gets entirely absorbed by depreciation recapture (since $80,000 of depreciation was taken on the original property, and recapture claims recognized gain up to that amount first) — none of it reaches the lower capital gains rate. If the recognized gain had been larger than the depreciation taken, the excess would spill over into ordinary capital gains treatment. This ordering is exactly why even a "small" amount of boot can carry a higher effective tax rate than the same dollar amount of pure capital gain would.
What does it mean to exchange "equal or up," and why do investors aim for it?
Exchanging equal or up means your replacement property's purchase price and mortgage balance are each equal to or greater than what you had on the relinquished property. Doing so is the standard way to defer 100% of your gain — falling short on either price or debt, even slightly, creates boot and triggers some immediate tax, as this calculator's own default scenario shows.
Using the calculator's defaults, the replacement property's price ($620,000 + $12,000 in expenses = $632,000) actually exceeds the relinquished property's net proceeds, but the new mortgage ($180,000) came in $20,000 below the old mortgage ($200,000) — creating mortgage boot despite the overall transaction being larger. This is a common trap: investors focus on "did I buy something bigger" and miss that debt has to equal or exceed the old debt too, dollar for dollar, independent of the price comparison.
What are the 45-day and 180-day deadlines, and can they be extended?
From the date your relinquished property sale closes, you have 45 calendar days to formally identify potential replacement properties in writing to your qualified intermediary, and 180 calendar days total (not 180 days after the 45-day period — both clocks start on the same closing date) to close on the replacement property. Both deadlines are strict calendar-day counts that include weekends and holidays, with no extensions available except in specific, narrow circumstances like federally declared disasters.
Using the calculator's defaults, a relinquished property closing on August 15, 2026 sets the identification deadline at September 29, 2026 and the closing deadline at February 11, 2027. Missing either deadline disqualifies the entire exchange retroactively — there's no partial credit for identifying property on day 46 or closing on day 181 — which is exactly why real estate investors typically have replacement property candidates lined up well before the relinquished property sale even closes.
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