1031 Exchange Calculator

People also ask

How is the tax on a rental sale calculated?

Take the net sale proceeds (sale price minus selling costs) and subtract the adjusted cost basis (original purchase price plus improvements minus depreciation taken). The resulting gain is split: depreciation recapture is taxed at up to 25% federal under Section 1250, and the remainder is taxed at the long-term capital gains rate. NIIT and state tax stack on top.

What does a 1031 exchange actually defer?

A 1031 generally defers federal capital gains tax and federal depreciation recapture that would otherwise be due in the tax year of the sale. The deferred amount carries into the basis of the replacement property. State treatment varies, and some states require ongoing tracking of deferred gains.

How long do you have to complete a 1031 exchange?

You generally have 45 calendar days after the relinquished property closes to identify replacement property in writing and 180 calendar days total to close on the replacement property. Both clocks start on the sale date, and missing either deadline can make the sale taxable.

Can you do a 1031 exchange on a primary residence?

A primary residence generally does not qualify for a 1031 exchange because Section 1031 applies to property held for investment or business use. Some mixed-use or converted properties may have both personal-residence and investment-property facts, but those situations need CPA and qualified-intermediary review before closing.

What is "boot" and how is it calculated?

Boot is any non-like-kind value you receive in the exchange — most commonly cash you keep (cash boot) or a smaller mortgage on the replacement property (mortgage boot). The recognized (taxable) gain on a partial exchange is the lesser of your realized gain or the net boot received. The rest of the gain is still deferred.

Why is the depreciation recapture tax so high?

Unrecaptured Section 1250 gain is taxed at a maximum federal rate of 25%, higher than the 0%, 15%, or 20% long-term capital gains rate. Cost segregation can reclassify some components as Section 1245 personal property, which is taxed at ordinary income rates with no 25% cap.

Do I really owe recapture if I never claimed depreciation?

Yes. The IRS calculates recapture based on depreciation that was "allowed or allowable" — meaning you generally owe recapture tax even if you never deducted it. Owners who skipped depreciation should ask a CPA whether a Form 3115 accounting-method change is appropriate.

How accurate is this calculator?

It uses the same straight-line approach as IPX1031, Realized Holdings, and Anchor1031: split realized gain into recapture (up to 25%) and LTCG, then add NIIT and state tax. It does not model passive activity loss carryforwards, AMT, K-1 partnership allocations, cost-segregation Section 1245 components, installment sales, or estate planning. For an exact figure, work with a CPA or 1031 specialist before closing.

Can I 1031 into Lofty fractional properties?

Lofty is not currently structured as a Delaware Statutory Trust (DST) or Tenant-in-Common (TIC) replacement property. Investors searching for "1031 exchange into partial ownership" typically work with a DST sponsor, TIC sponsor, qualified intermediary, and tax advisor.

What about reverse or improvement exchanges?

A reverse 1031 lets you acquire the replacement property before selling the old one. An improvement (build-to-suit) 1031 lets you spend exchange proceeds on construction. Both rely on an Exchange Accommodation Titleholder under IRS Rev. Proc. 2000-37 and follow the same 45-day and 180-day clocks.