1031 Exchange Calculator

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Property Details

Original Purchase Price

$

Capital Improvements

$

Accumulated Depreciation

$

Sales Price

$

Selling Expenses

$

Mortgage Balance at Sale

$

Tax Rates

Federal Capital Gains Rate (%)

State Capital Gains Rate (%)

Amortization Schedule (First 12 Months)

Loan Amount

$

Annual Interest Rate (%)

Loan Term (Years)

Start Date

Calculation Results

Net Adjusted Basis

$0

Capital Gain

$0

Depreciation Recapture (25%)

$0

Federal Capital Gains Tax

$0

State Capital Gains Tax

$0

Total Taxes Due

$0

Gross Equity

$0

After-Tax Equity

$0

Sale Reinvestment (After-Tax × 4)

$0

Exchange Reinvestment (Gross × 4)

$0

1031 Exchange Rules

45-Day Identification Period: You must identify potential replacement properties within 45 days of selling your relinquished property.
180-Day Purchase Period: You must complete the purchase of replacement property within 180 days of sale.
Equal or Greater Value: To defer all taxes, the replacement property must be of equal or greater value and all equity must be reinvested.

Amortization Schedule (First 12 Months)

Month	Payment	Principal	Interest	Balance

This calculator provides estimates only. Consult a qualified intermediary or tax professional for specific advice.

Calculation History

Date	Purchase Price	Sales Price	Tax Savings	Currency	Actions

No Calculation History

Your calculation history will appear here after you save calculations.

Calculation saved to history

Complete Guide to 1031 Exchange Calculator

Learn how to legally defer taxes when selling investment properties with our easy-to-use calculator

Imagine selling an investment property and keeping ALL your profit instead of giving 20-40% to the government in taxes. That's the magic of a 1031 Exchange! This powerful tax strategy has helped real estate investors build wealth for decades.

In this comprehensive guide, we'll explain everything in simple terms and show you how our 1031 Exchange Calculator can help you understand your potential tax savings.

What is a 1031 Exchange?

A 1031 Exchange (named after Section 1031 of the U.S. Internal Revenue Code) is a special tax rule that allows you to defer paying capital gains taxes when you sell an investment property and reinvest the proceeds in a similar ("like-kind") property.

Simple Analogy:

Think of it like a game of "hot potato" with taxes - you're passing the tax bill to your next property instead of paying it now. As long as you keep investing in similar properties, you can keep deferring those taxes indefinitely!

Try Our 1031 Exchange Calculator

See exactly how much you could save in taxes and how it impacts your investment power. No complicated math required!

The Core Formula Behind 1031 Exchanges

The Foundation:

Net Adjusted Basis = Purchase Price + Improvements - Depreciation

Capital Gain = Sales Price - Net Adjusted Basis - Selling Costs

Let's break down each part in simple terms:

1. Purchase Price (Original Cost)

This is what you originally paid for the property. It's your starting point.

Example:

You bought a rental property in 2010 for $300,000

Purchase Price = $300,000

2. Capital Improvements (Money You've Invested)

These are major upgrades that add value to the property. Not routine repairs, but things like:

• Adding a new roof
• Renovating a kitchen or bathroom
• Building an addition
• Installing a swimming pool

Example:

You spent $50,000 on a kitchen renovation and $20,000 on a new roof

Capital Improvements = $70,000

3. Accumulated Depreciation (The "Used Up" Value)

Depreciation is a tax deduction that lets you recover the cost of the building (not the land) over 27.5 years for residential property or 39 years for commercial property.

Example:

Over 10 years, you've taken $109,090 in depreciation deductions

Accumulated Depreciation = $109,090

4. Sales Price (What You're Selling For)

The total amount you receive from selling the property.

Example:

You sell your rental property for $600,000

Sales Price = $600,000

5. Selling Expenses (Costs to Sell)

These include:

• Real estate agent commissions (typically 5-6%)
• Closing costs
• Title insurance
• Legal fees

Example:

You pay $36,000 in commissions and $4,000 in closing costs

Selling Expenses = $40,000

Putting It All Together: A Complete Example

Step 1: Calculate Net Adjusted Basis

$300,000 (Purchase) + $70,000 (Improvements) - $109,090 (Depreciation)

= $260,910

Step 2: Calculate Capital Gain

$600,000 (Sales Price) - $260,910 (Basis) - $40,000 (Expenses)

= $299,090

Step 3: Calculate Taxes

$109,090 × 25% = $27,273 (Depreciation Recapture)

($299,090 - $109,090) × 20% = $38,000 (Capital Gains Tax)

Total Taxes = $65,273

The 1031 Exchange Magic:

With a 1031 Exchange, you could DEFER paying that $65,273 in taxes! That money stays in your pocket to reinvest in your next property, giving you much more buying power.

How Our Calculator Works (Step-by-Step)

1 Enter Property Details

Fill in your actual numbers for purchase price, improvements, depreciation, sales price, and selling expenses. Our calculator works with 50+ currencies!

2 Input Tax Rates

Enter your federal and state capital gains tax rates. Most investors pay 15-20% federal plus state taxes (varies by state).

3 Click Calculate

Our calculator instantly shows you:

• How much tax you'd pay without a 1031 exchange
• How much buying power you'd lose to taxes
• How much MORE you could invest with a 1031 exchange

Important: The 4× Reinvestment Rule

Our calculator shows what you could buy if you reinvested your after-tax equity 4 times over 30 years. This demonstrates the compound effect of keeping taxes in your portfolio!

Example: $100,000 saved from taxes could grow to $400,000+ through repeated investments!

Key Features of Our Calculator

Global Currency Support

Works with 50+ currencies - perfect for international investors or those planning to invest abroad.

History Tracking

Save and compare different scenarios. See how changes in prices or tax rates affect your savings.

Export Results

Save as PDF, HTML, or text files to share with your accountant, attorney, or financial advisor.

Auto-Save Feature

Never lose your work! Our calculator automatically saves your inputs as you type.

Understanding the Critical Timelines

1031 exchanges have strict deadlines that you MUST follow:

The 45-Day Rule

You must IDENTIFY potential replacement properties within 45 calendar days of selling your property. Weekends and holidays count!

The 180-Day Rule

You must CLOSE on the replacement property within 180 calendar days of selling your original property (or by your tax filing deadline, whichever comes first).

Pro Tip: Use a Qualified Intermediary

You CANNOT touch the sales proceeds during a 1031 exchange. The money must go through a Qualified Intermediary (QI) who holds it in escrow until you buy the replacement property.

15 Frequently Asked Questions (FAQs)

1. What types of properties qualify for a 1031 exchange?

Any property held for investment or business purposes qualifies. This includes rental properties, commercial buildings, vacant land, and even certain types of leasehold interests. Your primary residence does NOT qualify.

2. Can I exchange multiple properties for one, or vice versa?

Yes! You can sell multiple properties and buy one (consolidation), or sell one and buy multiple (diversification). The important rule is that the total value of what you buy must be equal to or greater than what you sell.

3. What happens if I can't find a replacement property in 45 days?

If you don't identify any replacement properties within 45 days, your exchange fails, and you must pay all taxes due. You can identify up to 3 properties of any value, or more than 3 if their total value doesn't exceed 200% of what you sold.

4. Can I take some cash out during the exchange?

Yes, but you'll pay taxes on that amount (called "boot"). Any cash you receive or debt reduction you get is taxable. To fully defer taxes, you must reinvest all equity and take on equal or greater debt.

5. How does depreciation recapture work in a 1031 exchange?

Normally, depreciation you've taken is "recaptured" at 25% when you sell. In a 1031 exchange, this tax is deferred along with capital gains tax. The depreciation carries over to your new property.

6. Can I do a 1031 exchange into a different state?

Absolutely! 1031 exchanges work across state lines. Many investors use exchanges to move investments to more favorable markets or states with better tax laws.

7. What happens when I eventually sell and don't do another exchange?

When you eventually sell and don't reinvest, you'll pay all deferred taxes (capital gains and depreciation recapture) at that time. Many investors continue exchanging until death, when their heirs get a "step-up in basis" and avoid the taxes entirely.

8. Can I exchange a rental property for a vacation home?

This is a gray area. The property must be held for investment purposes. If you intend to rent the vacation home most of the year, it might qualify. Personal use should be limited. Always consult a tax professional.

9. How much does a 1031 exchange cost?

Qualified Intermediary fees typically range from $750 to $1,500, plus additional fees for complex transactions. Legal and accounting fees may apply. Compare this cost to the taxes you're deferring - it's usually much less!

10. Can I do a 1031 exchange if I have a mortgage?

Yes, mortgages are common. To fully defer taxes, your new property must have equal or greater debt. If your new mortgage is smaller, the difference is treated as cash received and is taxable.

11. What's the difference between "like-kind" properties?

"Like-kind" is broadly defined for real estate. You can exchange an apartment building for vacant land, a retail center for an office building, etc. The properties must both be in the United States and held for investment or business use.

12. Can I do improvements on the replacement property as part of the exchange?

Yes! This is called an "improvement exchange" or "build-to-suit" exchange. You can use exchange funds to make improvements on the replacement property, as long as they're completed within the 180-day period.

13. How does our calculator handle different currencies?

Our calculator uses current exchange rates for 50+ currencies. You can calculate in your local currency and compare results across different currencies. Perfect for international investors!

14. Can I save multiple calculation scenarios?

Yes! Our history feature lets you save unlimited calculations. You can compare "what-if" scenarios, track changes over time, and export everything for your records.

15. What if I make a mistake in my exchange?

Mistakes can be costly. That's why it's crucial to work with experienced professionals. Our calculator helps you understand the numbers, but always work with a Qualified Intermediary, tax attorney, or CPA for your actual exchange.

The Power of Compounded Savings

Our calculator's "4× Reinvestment" feature shows something remarkable: the compound effect of tax deferral.

The Math of Compounding:

If you save $50,000 in taxes today and reinvest it:

• Year 1: That $50,000 buys more property
• Year 10: Through appreciation and additional exchanges, it could grow to $200,000
• Year 20: Through continued compounding, it could reach $400,000+

This is why savvy real estate investors use 1031 exchanges repeatedly to build significant wealth over time.

Final Thought:

A 1031 exchange isn't just about avoiding taxes today. It's about keeping more of your money working for you over decades. The longer you defer taxes, the more your money can compound and grow.

Our calculator helps you see this powerful effect in concrete numbers. Knowledge is power - especially when it comes to keeping more of your hard-earned money!