1031 Exchange Calculator
Calculate tax deferral and boot when exchanging investment properties
1031 exchanges let real estate investors defer capital gains and depreciation recapture tax when they roll proceeds into like-kind property. Every figure here is computed from IRC §1031, the Treasury regulations, and Publication 544, and re-verified each tax year.
What is a 1031 exchange and how does it work?
A 1031 exchange allows you to defer capital gains and depreciation recapture taxes when selling investment property by reinvesting proceeds into like-kind property. You have 45 days to identify replacement properties and up to 180 days to close, capped at your return's due date including extensions. A qualified intermediary (or a qualified escrow account or trust) usually holds the funds.
- •45-day identification deadline (strict)
- •180-day closing deadline, or your return's due date if earlier and you don't extend
- •Proceeds usually held by a qualified intermediary (or qualified escrow or trust)
- •Defers both capital gains AND depreciation recapture
Most people who walk into a 1031 think the hard part is finding the next property. It isn't. The hard part is the calendar. Miss the 45-day identification by a single day — and we mean a single day — and the entire deferral collapses into a fully taxable sale.
Real-world scenario
A Phoenix duplex investor, $612,000 sale price
A long-time landlord sells a Phoenix duplex for $612,000 with $184,000 of deferred capital gain and $71,000 of depreciation recapture. On a straight sale they'd owe roughly $42,000 in federal capital gains plus up to $17,750 in recapture (25% is the cap). Run cleanly through a 1031 with a Qualified Intermediary, the bill is $0 today — the basis carries forward into the replacement property.
The part most people miss
The 45-day clock starts the day your relinquished property closes, not the day you sign the contract. Identifying on day 46 is the most common reason exchanges fail — and the IRS does not grant extensions for it, even in disasters, unless a specific federal disaster declaration applies.
Property Being Sold (Relinquished)
Purchase price + improvements - depreciation
Day 0 for both deadlines: the date the deed transferred to your buyer (the first closing, if you sell more than one property).
Property Being Acquired (Replacement)
Exchange Details
Cash taken out at closing. Proceeds left over after the replacement purchase are counted as boot automatically.
Enter Exchange Details
Fill in both properties to calculate your 1031 exchange
1031 Exchange Requirements
Both properties must be held for investment or business use. The proceeds are usually held by a qualified intermediary (a qualified escrow account or trust also works).Full guide →45/180-day timeline →
Sources & References
Primary references used for this content
Like-Kind Exchanges
§1031 reporting, boot, and deferred gain
View on irs.gov
Exchange of real property held for productive use
Like-kind exchange requirements and timelines
View on law.cornell.edu
Sales and Other Dispositions of Assets
Gain/loss character, recapture, and like-kind exchanges
View on irs.gov
✓3 primary sources; links re-checked on a weekly rotation by the source watcher
Disclaimer: This calculator provides estimates for educational purposes only. Not tax, legal, or financial advice. Results may vary based on your specific circumstances. Consult a qualified CPA or tax professional for personalized guidance.