Free like-kind exchange calculator
Enter the property values, boot, and adjusted basis — this §1031 like-kind exchange calculator shows realized gain, recognized gain, and your carryover basis in the replacement property, updated live, as you type.
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Does not include capital expenditures, vacancy surprises, or tax benefits. Consult a real estate professional for investment decisions.
Results are estimates. Consult a professional.
How the §1031 like-kind exchange calculator works
A §1031 like-kind exchange allows real estate investors and business owners to defer capital gains tax when they sell one investment or business property and reinvest the proceeds into another qualifying property. The key word is 'defer' — the gain is not forgiven, it is rolled into the new property's basis and taxed when that property is eventually sold outside a §1031 exchange.
Two hard deadlines govern the exchange: the replacement property must be identified within 45 days of closing the relinquished property, and the exchange must close within 180 days of that same closing date. The funds must be held by a Qualified Intermediary (QI) — also called an accommodator — and cannot be constructively received by the taxpayer at any point during the exchange.
IRS Publication 544 — Sales and Other Dispositions of AssetsWorked example: $500k property with $200k adjusted basis
An investor sells a rental property with a fair market value of $500,000 and an adjusted basis of $200,000 (original cost $250,000 minus $50,000 accumulated depreciation). The realized gain is $300,000. We examine four scenarios based on how much 'boot' — cash or dissimilar property — the investor receives during the exchange.
Recognized gain by boot amount — $500k property, $200k basis
The table below shows how increasing amounts of boot received during a §1031 exchange of a $500,000 property (adjusted basis $200,000) translate into recognized gain — the portion that becomes taxable in the year of sale. The remaining $300,000 realized gain is deferred into the new property's basis.
| Boot received | Realized gain | Recognized gain | Tax deferred | New basis |
|---|---|---|---|---|
| $0 | $300,000 | $0 | $300,000 | $200,000 |
| $10,000 | $300,000 | $10,000 | $290,000 | $190,000 |
| $50,000 | $300,000 | $50,000 | $250,000 | $150,000 |
| $100,000 | $300,000 | $100,000 | $200,000 | $100,000 |
Source: IRS Publication 544; §1031 Internal Revenue Code. New basis = old basis − boot received + recognized gain (no additional boot paid in these examples).
Tips for a successful §1031 exchange
The §1031 exchange is one of the most powerful tax-deferral tools available to US real estate investors — but it is also one of the most procedure-driven. Missing a single deadline or constructively receiving funds can disqualify the entire exchange, triggering immediate taxation on the full realized gain.
- Engage a Qualified Intermediary before closing — The QI must be in place before the relinquished property sale closes. You cannot use your attorney, CPA, or real estate agent as a QI if they have acted as your agent in the past two years. The QI holds the exchange funds in escrow throughout the process.
- Identify replacement property precisely by day 45 — The IRS requires written identification of the replacement property within 45 days. The three-property rule allows you to identify up to three properties of any value; the 200% rule allows you to identify more properties as long as their combined FMV does not exceed 200% of the relinquished property's FMV.
- Trade up in value to maximise deferral — To defer all gain, the replacement property must cost at least as much as the relinquished property's net selling price (net of exchange expenses). Trading down in value is allowed but the shortfall is treated as boot received.
- Understand depreciation recapture — The $50,000 depreciation taken in the example above reduces basis. When the eventual gain is recognised (in a future taxable sale), the IRS taxes recaptured depreciation at 25%, not the standard long-term capital gains rate. Your QI and tax professional should model this separately.
- Plan for state-level conformity issues — Most US states conform to §1031 deferral, but some (California, Massachusetts) have clawback provisions that can tax the deferred gain if the replacement property is subsequently sold and you are no longer a resident. Verify state rules with a local tax professional.
Accuracy and limitations
This calculator applies the §1031 formulas mechanically based on the values you enter. It does not account for depreciation recapture under §1250, state tax treatment, instalment sale provisions, related-party exchange restrictions, or exchanges involving personal property. The results assume a standard deferred exchange (forward exchange) structure — reverse and improvement exchanges involve additional rules not modelled here.
IMPORTANT: This tool is for educational and informational purposes only and does not constitute tax, legal, or financial advice. §1031 exchanges involve complex IRS rules, strict deadlines, and state-specific requirements. An error can result in full immediate taxation of the deferred gain. You must work with a licensed Qualified Intermediary and a qualified tax professional (CPA or tax attorney) before entering into any §1031 exchange transaction. Do not rely solely on this calculator for any exchange-related decisions.
§1031 like-kind exchange terms defined
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