1031 Exchange Calculator: Capital Gains Tax Deferral & Boot
Estimate the capital gains and depreciation recapture tax a like-kind exchange lets you defer, check whether your replacement property avoids taxable boot, and see your 45-day identification and 180-day closing deadlines.
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With 1031 exchange
Taxable sale
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45 days to identify replacements in writing
180 days to close (or your tax return due date, if earlier)
Taxable Sale vs 1031 Exchange
Side-by-side reconciliation of gain, tax and cash to reinvest.
| Item | Taxable Sale | 1031 Exchange | Difference |
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The Three Identification Rules
- Three-property rule: identify up to three potential replacements of any value.
- 200% rule: identify any number, as long as their total value is no more than 200% of the relinquished property's value ($1,700,000 here).
- 95% rule: if you exceed both, you must actually acquire at least 95% of the total value you identified.
Cash Boot & Mortgage Boot
Cash boot is sale proceeds you don't reinvest — including money you receive directly rather than through the qualified intermediary. Mortgage boot arises when your new debt is less than the debt paid off, unless you make up the difference with additional cash. Boot is taxable up to the amount of your gain.
How this 1031 exchange calculator works
Adjusted basis = purchase price + improvements − depreciation. Realized gain = sale price − selling costs − adjusted basis. In a taxable sale, gain up to the depreciation taken is taxed as recapture (up to 25%), the rest at the long-term capital gains rate, plus the 3.8% net investment income tax if it applies and your state's rate.
In an exchange, only boot is taxed: cash boot = net equity − cash put into the replacement; mortgage boot = old debt − new debt − any extra cash added. The recognized gain is the smaller of total boot and the realized gain; the rest is deferred and carried into the replacement property's basis.
By Suhaib Hassan · Formula verified 27 Sep 2026 against IRC §1031 and IRS Form 8824 instructions · How CalculatePilot verifies formulas →
Frequently asked questions
What is a 1031 exchange?
A 1031 exchange lets you sell real property held for investment or business use and buy another like-kind property while deferring the capital gains and depreciation recapture tax, under Section 1031 of the Internal Revenue Code.
What is boot in a 1031 exchange?
Boot is any value you receive that isn't like-kind property — cash you take out, or a reduction in mortgage debt that you don't offset with added cash. Boot is taxable up to the amount of your realized gain.
What are the 45-day and 180-day deadlines?
You must identify potential replacement properties in writing within 45 days of selling the relinquished property, and complete the purchase within 180 days of the sale or by your tax return due date (including extensions), whichever comes first.
Does a 1031 exchange eliminate the tax?
No, it defers it. The deferred gain reduces the basis of the replacement property and becomes taxable when you eventually sell without exchanging again — although heirs may receive a stepped-up basis.
Can I use a 1031 exchange on my home?
Not on a main home. Section 1031 applies to real property held for investment or used in a business. A main home may instead qualify for the Section 121 exclusion of up to $250,000 of gain ($500,000 married filing jointly).
Related Real Estate Calculators
Analyze the properties on both sides of the exchange.