Key 1031 Exchange Rules
- Equal or Greater Value Rule: To defer 100% of taxes, the replacement property purchase price must be equal to or greater than the net sale price of the relinquished property.
- 45-Day Identification Period: Investors have 45 calendar days from sale closing to identify replacement properties.
- 180-Day Exchange Period: Replacement property acquisition must close within 180 calendar days of selling the original property.
1031 Exchange Scenario Table ($850,000 Relinquished Sale / $350,000 Basis)
| Replacement Property Purchase Price | Realized Capital Gain | Taxable Boot (Cash Keep) | Capital Gains Tax Deferred | Taxable Boot Owed (25%) |
|---|---|---|---|---|
| $950,000 (Greater Value) | $500,000 | $0.00 | $125,000 (100% Deferred) | $0.00 |
| $850,000 (Equal Value) | $500,000 | $0.00 | $125,000 (100% Deferred) | $0.00 |
| $750,000 ($100k Less) | $500,000 | $100,000 | $100,000 Deferred | $25,000 Tax Owed (Boot) |
How to Use This 1031 Exchange Calculator
- Select your preferred account currency from the header picker.
- Enter relinquished property sale price (e.g., $850,000).
- Input adjusted cost basis (purchase price - depreciation + improvements).
- Enter target replacement property purchase price (e.g., $950,000).
- Set combined capital gains tax rate (%).
- View total realized capital gain, tax deferred amount, and taxable boot liability.
Frequently Asked Questions
What is an IRS Section 1031 Like-Kind Exchange?
Section 1031 allows real estate investors to defer paying capital gains and depreciation recapture taxes upon selling an investment property by reinvesting the proceeds into a replacement like-kind property.
What are the key timelines for a 1031 exchange?
Investors have 45 calendar days from sale closing to formally identify replacement properties, and must close on the replacement property within 180 calendar days.
What is ‘boot’ in a 1031 exchange?
Boot is any non-like-kind property received in an exchange, such as cash kept or debt reduction. Boot is fully taxable up to the total realized capital gain.
Can a primary residence qualify for a 1031 exchange?
No. Section 1031 applies exclusively to real estate held for investment or productive use in a trade or business. Primary residences do not qualify.
Who holds the funds during a 1031 exchange?
A Qualified Intermediary (QI) must hold all sale proceeds. If the seller touches or receives the cash directly, the 1031 exchange is disqualified and taxes become immediately due.
What qualifies as ‘like-kind’ real estate?
Nearly all real property within the U.S. is like-kind to other U.S. real property (e.g., selling a single-family rental to buy an apartment building or commercial retail space).
Is my personal financial data saved on any server?
No. All calculations run locally inside your web browser. History and saved presets are stored strictly in your browser’s local storage.