How is boot taxed in a 1031 exchange?

Boot is taxed RECAPTURE-FIRST, then LTCG. Boot Recapture Portion = MIN(Total Boot, Depreciation Taken) × 25%. Remaining boot taxed at your LTCG bracket. Plus state and NIIT.

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1031 Exchange Calculator — Tax Deferred + Eligibility Verdict

Q: Does this calculator work for primary residence sales?

No. 1031 exchanges apply only to investment/business property. For primary residence, use Section 121 exclusion (up to $250K Single / $500K MFJ tax-free gain).

Q: Does an ELIGIBLE Verdict mean my exchange will succeed?

No. ELIGIBLE means your inputs structurally permit deferral. Does NOT verify Qualified Intermediary usage, like-kind property classification, or IRS compliance. Final eligibility requires CPA + 1031-specialized attorney review.

Q: What happens if I miss the 45-day deadline?

Exchange is dead — even if within 180-day window. The 45-day deadline is absolute (calendar days, no business-day extension). Full capital gains tax applies as if no exchange was attempted.

45/180-day deadlines, boot taxation, depreciation recapture — for tax-strategy decisions before selling

1031 Exchange

—fill in fields below

Relinquished Property (Sale)

Sale Price

Selling Costs %

Original Purchase Price

Original Closing Costs

Capital Improvements

Years Held

Mortgage Payoff at Sale

Depreciation Taken

Replacement Property (Purchase)

Replacement Property Price

For full deferral: must be ≥ your net sale proceeds

New Mortgage Amount

Cash Boot Received

Tax Profile

Filing Status

Federal LTCG Bracket

State Cap Gains Rate %

Annual Income (AGI)

NIIT 3.8%: enter AGI to check

Exchange Timing

Closing Date of Sale

45-Day Deadline

Jun 18, 2026

Identify replacement in writing

180-Day Deadline

Oct 31, 2026

Close on replacement property

Both deadlines are calendar days — no business-day extensions. Missing 45-day = exchange dead even within 180-day window.

Enter sale price, replacement price,
and original purchase price to begin.

Saved Scenarios

0/20 saved

No saved scenarios yet

Fill in the calculator above, then save your first scenario.

Calculate Tax Deferred via 1031 Exchange + Eligibility Verdict

45/180-day deadlines, boot taxation, depreciation recapture — for tax-strategy decisions before selling

Selling a rental property and facing a $50,000–$200,000 capital gains tax bill? Use this 1031 Exchange Calculator to estimate exactly how much tax you can defer — including federal LTCG, depreciation recapture (25%), state capital gains, and NIIT (3.8%) — with a clear Eligibility Verdict and 45/180-day deadline countdown. The calculator answers the central question for every investor considering a tax-deferred swap: is the 1031 worth it at this deal size, and am I still in the eligibility window?

Most 1031 calculators show only the Tax Deferred dollar amount. This one adds five layers that matter for real decisions: an Eligibility Verdict (ELIGIBLE — STRONG / ELIGIBLE — MODERATE / PARTIALLY DEFERRED / AT RISK / NOT ELIGIBLE) that grades not just structure but economic benefit; a live 45-day and 180-day deadline countdown with hard-fail logic; boot taxation using the correct IRS recapture-first allocation (not uniform LTCG rates); a comparison of straight sale vs full exchange vs partial exchange; and a Verdict downgrade when Tax Deferred falls below $10K — because the complexity of a 1031 often exceeds small savings.

Common questions this calculator answers:

"How much capital gains tax do I defer with a 1031 vs straight sale?"
"I'm 38 days post-sale — am I still eligible to identify replacement?"
"My replacement property is $50K cheaper — how much boot tax do I owe?"
"Is my benefit even worth the 1031 complexity at this size deal?"

1031 exchanges DEFER capital gains tax into your replacement property — they don't eliminate it. Tax is owed when the replacement is sold (unless chained into another 1031). The deferral is real — but the math, deadlines, and structure decide whether it actually helps you.

If you're evaluating whether replacement property fundamentals justify the exchange, run the candidate through our Real Estate ROI Calculator for full ROI analysis alongside this tax-strategy view.

This calculator estimates 1031 exchange tax deferral for investment property only — not primary residence. Tax is DEFERRED, not eliminated. Eligibility shown is ASSUMED based on inputs — final eligibility depends on Qualified Intermediary, like-kind classification, and IRS compliance. State capital gains and NIIT calculations are simplified — actual amounts may differ. This tool is an estimation tool, not tax advice. Engage a 1031-specialized CPA before initiating an exchange.

1031 Exchange Questions This Calculator Answers

Common long-tail queries — answered with real numbers

Investors come to this calculator with very specific questions. Here are the most common ones — answered with real numbers in seconds.

"How much tax can I defer with a 1031 exchange?"

Calculator returns exact Tax Deferred amount based on your sale price, basis, depreciation taken, and tax bracket. Enter your numbers above for a precise estimate.

"1031 exchange example with numbers"

See the worked example above — $500K sale, $200K original purchase, 10-year hold = ~$87K Tax Deferred at 15% LTCG, 5% state, NIIT applicable.

"What happens if I miss the 45-day deadline?"

Exchange dies — even if within 180-day window. Calculator's Verdict turns NOT ELIGIBLE and you owe full capital gains tax as if no exchange was attempted.

"1031 exchange rules 2026"

Federal LTCG brackets (0/15/20%), depreciation recapture (25%), state tax (varies), NIIT (3.8% above $250K MFJ / $200K Single). All factored into calculator. 45-day and 180-day deadlines remain unchanged.

"How do I avoid boot tax in a 1031 exchange?"

Match replacement value AND replacement debt to relinquished. Boot = $0 = no tax. Calculator shows exactly when boot triggers across all three types (cash, mortgage, trade-down).

"Can I live in a 1031 exchange property?"

Not initially — investment property only. After holding as investment for 2+ years, IRS safe harbor rules may permit conversion to primary residence. Consult CPA on safe harbor rules.

"How much tax do you pay on a 1031 exchange?"

Zero, if all conditions met and no boot. If partial exchange, boot tax owed — recapture-first allocation: up to 25% × boot (recapture portion) + your LTCG bracket × remaining boot.

"1031 exchange deadline rules"

45 days to identify replacement in writing to QI. 180 days to close. Both calendar days. Both absolute. Missing 45-day = exchange dead even within 180-day window.

Enter your numbers above for a complete answer to any of these questions.

How to Use the 1031 Exchange Calculator

From property inputs to Eligibility Verdict and Tax Deferred amount

Enter relinquished property details

Original purchase price, capital improvements, years held, sale price, selling costs %, and current loan balance. Calculator auto-calculates depreciation using simplified 27.5-year residential schedule — override with your actual Schedule E depreciation if available.

Enter replacement property details

Replacement Purchase Price and Replacement Loan Amount. For full tax deferral, the replacement value must be ≥ your net sale proceeds AND replacement debt must be ≥ current loan balance. Either shortfall creates boot.

Set your tax profile

Filing Status (MFJ/Single/HoH), Federal LTCG Bracket (0/15/20%), State Capital Gains Rate (set 0% for FL/TX/NV/WA/SD/AK/WY/NH/TN), and Annual Income for NIIT determination. NIIT 3.8% applies automatically if AGI > $250K MFJ or $200K Single.

Set sale and exchange dates

Enter the closing date of your relinquished property sale. Calculator computes 45-day Identification Deadline and 180-Day Exchange Deadline automatically. Both are absolute calendar days — no business-day extensions.

Read the Eligibility Verdict at the top

ELIGIBLE STRONG (≥$50K deferred, no boot) / ELIGIBLE MODERATE ($10K-$50K) / PARTIALLY DEFERRED (boot present) / AT RISK (tight deadline, small savings, or replacement < 80% of sale price) / NOT ELIGIBLE (hard fail). Verdict is ASSUMED — not verified. Final eligibility requires CPA + QI + attorney.

Pro Tips

Override Auto-Depreciation

Calculator uses simplified 27.5-year residential schedule. If you took bonus depreciation, cost segregation, or land adjustments, enter actual depreciation from Schedule E for accuracy.

Check Your LTCG Bracket

Most investors land in 15% (income $94K–$583K MFJ in 2026). Top 20% triggers above $583K MFJ. Below $94K MFJ may qualify for 0% LTCG rate.

Boot Is Taxed Recapture-First

With $100K depreciation taken and $50K of boot, the entire $50K is taxed at 25% recapture rate — not 15% LTCG. This catches many investors off-guard at filing.

Verdict Downgrade for Small Benefits

If Tax Deferred < $10K, calculator downgrades to AT RISK regardless of structural eligibility. QI fees ($750–$2,500) plus deadline pressure often exceed small benefits.

Inputs and Outputs

Input	Required	Default
Relinquished Property
Sale Price	Required	Required
Selling Costs %	Optional	Enter commission + closing
Original Purchase Price	Required	Required
Original Closing Costs	Optional	0
Capital Improvements	Optional	0
Years Held	Optional	For auto-depreciation
Mortgage Payoff at Sale	Optional	0 (all-cash)
Total Depreciation Taken	Optional	Auto-calc (27.5yr)
Replacement Property Price	Required	Required
New Mortgage Amount	Optional	0
Cash Boot Received	Optional	0
Filing Status	Optional	Married Filing Jointly
Federal LTCG Bracket	Optional	15%
State Capital Gains Rate	Optional	Enter your state rate
Annual Income (AGI)	Optional	For NIIT check
Sale Date	Optional	Today

Output	Formula
Eligibility Verdict	5 tiers (ELIGIBLE STRONG / MODERATE / PARTIAL / AT RISK / NOT ELIGIBLE)
Tax Deferred	Total Tax If Sold − Tax If Exchanged
Total Tax If Sold	Fed Recapture + Fed LTCG + State + NIIT
Tax If Exchanged	Boot Tax only (recapture-first allocation)
Realized Gain	Sale Price − Selling Costs − Adjusted Basis
Recapture Portion	MIN(Realized Gain, Depreciation Taken)
LTCG Portion	Realized Gain − Recapture Portion
Total Boot	Cash Boot + Mortgage Boot + Trade-Down Boot (capped at Realized Gain)
45-Day Deadline	Sale Date + 45 calendar days
180-Day Deadline	Sale Date + 180 calendar days
Days Remaining (ID / Exchange)	45 or 180 − Days Since Sale

1031 Exchange Calculation Step-by-Step (With Numbers)

The math behind Tax Deferred, Boot Taxation, and Eligibility checks

How 1031 Exchange Tax Is Calculated (3-Phase Approach)

1031 exchange tax math has three phases: (1) Calculate what you'd owe in a straight sale — federal LTCG + depreciation recapture + state + NIIT layers. (2) Calculate boot if the exchange is partial — recapture-first allocation. (3) Tax Deferred = straight sale tax − boot tax from phase two.

Step-by-Step Calculation of 1031 Exchange Tax

Adjusted Basis

Adjusted Basis = Original Price + Closing Costs + Capital Improvements − Depreciation Taken

Realized Gain

Net Sale Proceeds = Sale Price − Selling Costs − Mortgage Payoff
Realized Gain = Sale Price − Selling Costs − Adjusted Basis
Recapture Portion = MIN(Realized Gain, Depreciation Taken)
LTCG Portion = Realized Gain − Recapture Portion

Tax If Sold (4 Layers)

Federal Recapture Tax = Recapture Portion × 25%
Federal LTCG Tax = LTCG Portion × Federal LTCG Bracket
State Capital Gains Tax = Realized Gain × State Rate ⓘ simplified
NIIT = Realized Gain × 3.8% (if AGI > threshold) ⓘ simplified
Total Tax If Sold = sum

Boot Taxation — RECAPTURE-FIRST (Critical)

Boot Recapture Portion = MIN(Total Boot, Depreciation Taken)
Boot LTCG Portion = Total Boot − Boot Recapture Portion
Boot Recapture Tax = Boot Recapture Portion × 25%
Boot LTCG Tax = Boot LTCG Portion × Federal LTCG Bracket
Boot State Tax = Total Boot × State Rate
Boot NIIT = Total Boot × 3.8% (if applicable)
Total Boot Tax = sum

Tax Deferred

Tax Deferred = Total Tax If Sold − Total Boot Tax

Example: 1031 Exchange Calculation With Numbers

Standard investor sale after 10-year hold

Inputs

Original Purchase: $200,000
Held: 10 years
Sale Price: $500,000 | Selling Costs: 7%
Current Loan: $150,000
Replacement: $500,000 | Replacement Loan: $150,000
Tax Profile: MFJ 15% LTCG, 5% State, NIIT applies

Results

Adjusted Basis: ~$130K (after ~$70K depreciation)
Net Sale Proceeds: ~$465K
Realized Gain: ~$335K
Recapture Tax (25%): ~$17.5K
LTCG Tax (15%): ~$39.75K
State + NIIT: ~$29.5K
Total Tax If Sold: ~$86.7K
1031 Tax Deferred: ~$86.7K (full deferral)
Verdict: ELIGIBLE — STRONG ✅✅

Key insight: standard 10-year hold with 2.5× appreciation produces ~$87K tax bill on straight sale. Full 1031 exchange defers all of it — that preserved capital becomes additional buying power in the replacement property.

What Is a 1031 Exchange? (Tax Deferral Rules Explained)

Tax deferral mechanism for investment real estate

A 1031 exchange (named after Section 1031 of the Internal Revenue Code) lets investors swap one investment property for another while deferring capital gains tax. The key word is DEFERRED — not eliminated. Tax is postponed until the replacement property is eventually sold without another exchange. Some investors chain 1031 exchanges across decades, effectively deferring tax indefinitely (sometimes called "swap till you drop" — basis steps up at death, heirs receive stepped-up basis). The exchange must follow strict IRS rules: investor cannot touch the sale proceeds (Qualified Intermediary holds funds), replacement must be like-kind investment property, identification must happen within 45 days of sale, and the exchange must close within 180 days.

The primary benefit is preserving capital that would otherwise go to tax. On a $300K gain in the 15% LTCG bracket, an investor faces federal LTCG of ~$45K, depreciation recapture of $15-25K, state capital gains of ~$15K (at 5%), and NIIT of ~$11K (if applicable) — totaling $85-95K of tax deferred through a 1031. That preserved capital becomes additional buying power in the replacement property. Beyond buying power, 1031 enables strategic shifts: out of management-intensive properties into passive investments, out of appreciating markets into cash-flow markets, or geographic relocation without tax friction.

At 2026 rates, 1031 deferral is particularly valuable for high-LTCG-bracket investors (20% federal — saves 20%+ on the LTCG portion), high-state-tax investors (CA 13.3%, NJ 10.75%, OR 9.9%), NIIT-affected investors (AGI over $250K MFJ adds 3.8%), and heavily-depreciated properties where $100K+ depreciation recapture savings are on the line.

How to Read the Eligibility Verdict, Tax Deferred, and Deadlines

Interpreting your 1031 exchange analysis

Eligibility Verdict — 5 Tiers

✅ELIGIBLE — STRONG TAX DEFERRAL ✅✅

All conditions met, no boot, Tax Deferred ≥ $50K. Clear economic case — deferral substantially exceeds QI fees and complexity.

✅ELIGIBLE — MODERATE BENEFIT ✅

All conditions met, no boot, Tax Deferred $10K–$50K. Workable — verify QI fees ($750–$2,500) leave meaningful net benefit.

🟡PARTIALLY DEFERRED 🟡

Conditions met but boot present — boot will be taxed now. Exchange works but partial gain taxable immediately (recapture-first allocation).

⚠️AT RISK ⚠

Deadline within 14 days, replacement < 80% of sale price, OR Tax Deferred < $10K. Exchange viable but tight or economically marginal.

❌NOT ELIGIBLE ❌

45-day or 180-day deadline missed, capital loss on sale, or structural hard fail. Exchange cannot proceed — treat as straight sale.

Eligibility ASSUMED: Verdict shown is ASSUMED based on your inputs. Calculator cannot verify like-kind property classification, Qualified Intermediary usage, or full IRS compliance. ELIGIBLE Verdict is a structural green light, not a guarantee — final eligibility requires CPA + 1031-specialized attorney review.

Tax Breakdown — 4 Layers

Federal LTCG (15-20%): typically the largest layer — applies to LTCG portion of gain (above depreciation recapture).
Depreciation Recapture (25% federal flat): applies ONLY to depreciation taken, NOT total gain. Critical distinction — taxed at 25% regardless of your LTCG bracket.
State Capital Gains (varies): flat % in this calculator. Actual state treatment varies — some states conform to federal 25% recapture rate, others tax at ordinary income rates. No-tax states (FL, TX, NV, WA, SD, AK, WY, NH, TN) should use 0%.
NIIT (3.8% if AGI > threshold): on full gain in this calculator. Actual NIIT = MIN(Net Investment Income, AGI excess) × 3.8% — may be lower at marginal AGI. Calculator output is upper-bound estimate.

Boot Interpretation

Boot is the taxable portion of an otherwise-deferred exchange. Three types: Cash Boot (cash received from exchange), Mortgage Boot (debt relief when replacement debt is less than relinquished debt), and Trade-Down Boot (net sale proceeds exceed replacement purchase price). Boot is taxed RECAPTURE-FIRST: first at the 25% recapture rate (up to depreciation taken), then at your LTCG bracket — NOT uniformly at LTCG rates.

Deadline Interpretation

45-Day Identification: WRITTEN identification of replacement property delivered to QI by 11:59 PM Day 45. Calendar days. No business-day extension. One day late = exchange dead.
180-Day Exchange: closing on replacement by 11:59 PM Day 180. Calendar days. Absolute deadline.
45-day failure = entire exchange dead, even within 180-day window. No exceptions outside presidentially-declared disaster zones.

Tax Deferred, Not Eliminated: Tax Deferred shown represents tax postponed, not saved. When the replacement property is eventually sold (without another 1031), the accumulated deferred tax becomes due. The benefit is the time value of money — preserved capital compounds over the deferral period.

1031 Exchange Benchmarks for 2026

Illustrative patterns, not measured data. Individual results depend on holding period, appreciation, depreciation, and tax profile.

Typical Tax Deferred by Deal Size

•Small ($150K–$300K sale, 5-10yr hold): $20K–$50K typical
•Mid-size ($300K–$600K sale, 10yr+ hold): $50K–$150K
•Large ($600K+ sale, high-bracket investor): $150K–$500K+

Boot Taxation Patterns

•Cash boot $50K with $100K+ depreciation: full $50K at 25% recapture
•Cash boot $50K with $30K depreciation: $30K at 25% + $20K at LTCG
•Combined boot > 50% of gain: significant taxation, reconsider 1031

Deadline Pressure Patterns

•Days 0–30: comfortable identification window
•Days 31–44: increasing urgency
•Day 45+: identification CLOSED — exchange dead
•Days 150–180: execution pressure to close

2026 NIIT Thresholds

•Single: AGI > $200,000 → 3.8% applies
•MFJ: AGI > $250,000 → 3.8% applies
•HoH: AGI > $200,000 → 3.8% applies
•NIIT in calculator is upper-bound estimate

QI engagement is REQUIRED before sale closes. Typical fees: $750–$2,500. Engage QI 30+ days before listing.

2️⃣

Talk to a 1031-Specialized CPA

Standard CPAs may miss state-specific recapture rules, NIIT nuances, or basis-tracking requirements across chained exchanges.

3️⃣

Engage a 1031-Specialized Attorney

Required for reverse exchanges, improvement exchanges, multi-property identification, or any non-standard structure.

If you don't have these professionals lined up before initiating, the deadline pressure (45 days to identify, 180 days to close) makes finding them mid-exchange nearly impossible.

Common Use Cases

Pre-Sale Strategic Decision

Considering selling appreciated property — calculator shows whether 1031 deferral is worth the complexity vs straight sale + tax payment. Compare Tax Deferred to QI fees + deadline pressure.

Live Deadline Tracking

Already in a 1031 (sale closed, looking for replacement) — calculator shows live countdown to 45-day and 180-day deadlines with color-coded urgency.

Replacement Property Comparison

Identified 2-3 replacement candidates — model each to see which produces full deferral vs which triggers boot. After identifying the tax-optimal candidate, evaluate its standalone performance with our Real Estate ROI Calculator and Property Cash Flow Calculator.

Boot Taxation Pre-Check

Replacement property is smaller or cheaper — calculator shows exact boot amount and recapture-first tax breakdown so you know the tax cost before committing.

State Relocation Analysis

Considering relocating to a no-tax state before sale — calculator shows whether the state CG rate change reduces tax. Note: state nexus rules may invalidate the strategy — verify with CPA.

Estate Planning Preview

Planning to chain 1031s through retirement — calculator quantifies cumulative deferred tax that becomes permanently eliminated at step-up. For multi-property comparison, use the Compare Real Estate Deals page with saved scenarios.

1031 Exchange Rules Explained (2026 IRS Update)

Methodology and regulatory alignment

Tax formulas align with IRS Publication 544, IRS Section 1031, and industry standards used by Federation of Exchange Accommodators (FEA) member QIs, 1031-specialized CPAs and attorneys, and major real estate finance textbooks. Boot taxation methodology (RECAPTURE-FIRST allocation) reflects current IRS guidance on partial 1031 exchanges. This is the more conservative treatment — some older calculators used uniform LTCG rates, which understate tax when depreciation recapture is significant.

Methodology aligns with IRS Section 1031 regulations and IRS Publication 544. The Eligibility Verdict layer (5 tiers with MODERATE/STRONG magnitude grading) and Verdict downgrade for small benefits add decision support beyond raw tax calculation. State tax and NIIT calculations are simplified — consult a state-licensed CPA for exact treatment in your state and situation.

Current 2026 Federal LTCG Brackets

0% bracket: ≤$47,025 Single / ≤$94,050 MFJ
15% bracket: $47,026–$518,900 Single / $94,051–$583,750 MFJ
20% bracket: >$518,900 Single / >$583,750 MFJ

Verify exact thresholds with IRS tables — adjusted annually.

1031 Deadline Rules (Absolute)

45 days: identify replacement in writing to QI
180 days: close on replacement property
Both: calendar days, not business days
No extensions for weekends or holidays
Exception: presidentially-declared disaster zones only

Limitations of This Calculator

Eligibility ASSUMED, not verified

Calculator cannot verify like-kind property classification, Qualified Intermediary usage, deed assignment, or IRS compliance. ELIGIBLE Verdict means inputs structurally permit deferral — not that your specific exchange will succeed. Engage CPA + 1031-specialized attorney before initiating.

Tax DEFERRED, not eliminated

Capital gains tax is postponed, not saved. When replacement is eventually sold without another 1031, accumulated deferred tax becomes due. Calculator shows immediate tax savings — not lifetime tax savings.

State tax simplified

Calculator applies state rate as flat % to total gain. Actual state treatment of depreciation recapture varies — some states conform to federal 25%, others tax at ordinary income rates. Consult a state-licensed CPA.

NIIT simplified

NIIT shown is 3.8% × full gain when AGI > threshold. Actual NIIT = MIN(Net Investment Income, AGI excess) × 3.8% — may be lower at marginal AGI. Calculator output is upper-bound estimate.

Auto-depreciation simplified

Auto-depreciation uses 27.5-year residential schedule on (Original Price + Closing Costs). Does NOT model land-value separation, bonus depreciation, cost segregation, or commercial 39-year schedule. Override with actual Schedule E depreciation.

Reverse 1031 and Improvement exchanges not modeled

Calculator covers standard delayed exchanges only. Does NOT model reverse 1031 (replacement before sale), improvement exchanges (build-to-suit), or multi-property identification (3-property / 200% / 95% rules).

Single replacement property

Calculator models one replacement property. For multi-property identification strategies (3-property rule, 200% rule, 95% rule), consult a 1031-specialized attorney.

Not a substitute for professional advice

Educational estimation tool, not tax advice. Before initiating: 1031-specialized CPA (tax planning), 1031-specialized attorney (structure review), Qualified Intermediary (proceeds handling). Not investment or tax advice.

When NOT to Use This Calculator

• Primary residence sale: use Section 121 exclusion instead
• Stocks, bonds, partnership interests: 1031 only applies to real estate (since 2018 TCJA)
• Foreign property: 1031 requires US-to-US property only
• Inherited property: stepped-up basis usually eliminates need for 1031
• Very small gains (<$10K tax): complexity typically exceeds benefit
• Short-term holds (<1 year): ordinary income tax, 1031 rules complex

Common Mistakes in 1031 Exchange Analysis

Assuming uniform LTCG taxation on boot

Boot is taxed RECAPTURE-FIRST. With $100K depreciation taken and $50K boot, the full $50K is taxed at 25% recapture — not 15% LTCG. The difference: $12,500 vs $7,500.

Using down payment instead of replacement price for boot

Trade-Down Boot is calculated against FULL Replacement Property Price, not just down payment. Replacement debt counts as reinvestment because it transfers as part of the equity.

Missing the 45-day deadline by 1 day

45-day deadline = absolute calendar days, no business-day extension. Missing by even 1 day = exchange dead. Mark Day 40 in your calendar as action deadline.

Pursuing 1031 for very small tax savings

QI fees ($750–$2,500) + deadline pressure + replacement constraints often exceed benefits when Tax Deferred < $10K. Calculator downgrades Verdict to AT RISK in this range.

Treating ELIGIBLE Verdict as a guarantee

Verdict is a structural check on computable inputs. Does NOT verify QI usage, like-kind classification, deed assignment, or IRS compliance. Final determination is made by IRS, not this calculator.

Touching sale proceeds even briefly

Constructive receipt voids the entire 1031. Investor cannot touch proceeds — QI must hold throughout. Even a temporary deposit in investor's account is fatal to the exchange.

1031 Exchange Frequently Asked Questions (2026)

Does this calculator work for primary residence sales?

No. 1031 exchanges apply only to investment/business property, not primary residence. For primary residence, use Section 121 exclusion (up to $250K Single / $500K MFJ tax-free gain). Mixed-use cases (rented for years, then converted to residence) are complex — consult CPA.

Does an ELIGIBLE Verdict mean my exchange will succeed?

No. ELIGIBLE means your inputs structurally permit deferral — sale price matches replacement value, debt matches debt, deadlines on track. Does NOT verify Qualified Intermediary usage, like-kind property classification, proper deed assignment, or IRS compliance. Final eligibility requires CPA + 1031-specialized attorney review.

Do I save tax permanently with a 1031 exchange?

No. Tax is DEFERRED, not eliminated. When the replacement property is eventually sold without another 1031, the accumulated deferred tax becomes due. The benefit is the time value of money — preserved capital compounds during the deferral period. Stepped-up basis at death can effectively eliminate deferred tax for heirs.

How is boot taxed exactly?

Boot is taxed RECAPTURE-FIRST per IRC §1245/§1250. If you have $100K depreciation taken and $50K boot: Boot Recapture Portion = MIN($50K, $100K) = $50K → taxed at 25% = $12,500. Boot LTCG Portion = $0. Plus state tax and NIIT on full $50K. Total boot tax with 5% state + NIIT: ~$16,900.

What's the difference between the 45-day and 180-day deadlines?

Both are calendar days from sale closing. 45-day: deadline to IDENTIFY replacement property in writing (delivered to QI). 180-day: deadline to CLOSE on identified replacement. Both absolute. No business-day extensions. Missing 45-day = exchange dead even within 180-day window.

How accurate are the state tax and NIIT calculations?

Both are simplified. State tax: applied as flat % to total gain — actual treatment varies (some states conform to 25% federal recapture, others tax at ordinary income rates). NIIT: applied as 3.8% × full gain when AGI > threshold — actual NIIT = MIN(NII, AGI excess) × 3.8%, may be lower at marginal AGI. For exact calculations, consult state-licensed CPA.

Can I do a 1031 if I'm selling a property I lived in part-time?

1031 applies only to investment/business property. Mixed-use cases are complex — IRS considers conversion timing, rental history, and intent. Section 121 exclusion may be more beneficial than 1031. Consult 1031-specialized attorney.

What's a Qualified Intermediary and why do I need one?

A Qualified Intermediary (QI) is an independent third party who holds sale proceeds during the exchange period. Investor cannot touch proceeds — doing so triggers "constructive receipt" and full taxation. QI services typically cost $750–$2,500. Choose experienced 1031-specialized QI, engaged before the sale closes.

Can I exchange one property for multiple replacement properties?

Yes. Three identification rules: 3-property rule (up to 3 regardless of value), 200% rule (any number, total ≤ 200% of relinquished sale price), 95% rule (unlimited if you close on 95%+ of identified value). This calculator models single replacement only.

What if I'm doing a Reverse 1031?

Reverse 1031 exchanges (replacement purchased BEFORE sale) are legal but more complex — require Exchange Accommodation Titleholder (EAT) and stricter time constraints. This calculator does NOT model reverse exchanges. Consult a 1031-specialized attorney.

Should I add cash to replacement to avoid mortgage boot?

Often yes. Mortgage boot from debt relief can be offset by adding equivalent cash to replacement. $50K mortgage boot + $50K additional cash added → no net boot. This calculator assumes worst case (no cash offset to mortgage boot).

Can I save scenarios to compare candidate replacements?

Yes. The Saved Scenarios widget (immediately below the calculator) lets you save up to 20 scenarios for free. Load any saved scenario to restore all inputs and recalculate. Compare scenarios via the Compare Real Estate Deals page.

How much tax do you actually pay on a 1031 exchange?

If all conditions are met and no boot triggers: $0 — full deferral. With boot (partial exchange): tax on boot amount only — recapture-first allocation (25% × recapture portion + LTCG bracket × LTCG portion + state + NIIT). For typical $50K boot with $100K+ depreciation: approximately $15K–$20K tax.

What happens if a 1031 exchange fails?

Failed exchanges are treated as straight sales — full capital gains tax owed on the original sale. Most common failures: missed 45-day identification deadline (most common), missed 180-day completion deadline, QI mishandling, identification format problems, or constructive receipt. Tax owed = full "Total Tax If Sold" amount shown in calculator, plus QI fees.

Can you live in a 1031 exchange property?

Not initially. Replacement must be held for investment or business use. After holding as investment for minimum 2 years, IRS safe harbor rules permit conversion to primary residence. Then wait additional 5 years before claiming Section 121 exclusion. Attempting to claim primary residence intent at exchange time invalidates the 1031.

How many times can you do a 1031 exchange?

Unlimited. Investors can chain 1031 exchanges across decades — each defers accumulated tax from all previous exchanges ("swap till you drop"). At the investor's death, basis steps up to fair market value, effectively eliminating accumulated deferred tax for heirs. Each exchange must independently meet all IRS rules and has its own QI fees.