Calculator Documentation
1031 Exchange Calculator
Analyze tax deferral benefits of a 1031 like-kind exchange
Schema version 2.0.0 · Category: investment
Inputs
Relinquished Property (Sale)
Details of the property being sold
| Field | Type | Default | Notes |
|---|---|---|---|
| Sale Price | currency | $500,000 | Sale price of the property you are selling |
| Original Purchase Price | currency | $300,000 | |
| Capital Improvements | currency | $25,000 | Total capital improvements made during ownership |
| Selling Costs | currency | $30,000 | Agent commission, closing costs, transfer taxes, etc. |
| Accumulated Depreciation | currency | $0 | Total depreciation claimed over ownership. Leave at $0 for conservative estimate. |
Tax Rates
Federal and state tax rates
| Field | Type | Default | Notes |
|---|---|---|---|
| Capital Gains Tax Rate | percentage | 15.00% | Federal long-term capital gains tax rate (0%, 15%, or 20%) |
| Depreciation Recapture Rate | percentage | 25.00% | Depreciation recapture rate (typically 25%) |
| State Tax Rate | percentage | 0.00% | State capital gains tax rate (varies by state, 0% in some states) |
| NIIT Rate | percentage | 3.80% | Net Investment Income Tax (3.8% if AGI exceeds threshold) |
Replacement Property
Details of the replacement property
| Field | Type | Default | Notes |
|---|---|---|---|
| Replacement Price | currency | $600,000 | Purchase price of the replacement property |
| Replacement Mortgage | currency | $400,000 | Mortgage on the replacement property |
Calculations
Every figure this calculator produces, in evaluation order. Formulas reference input ids, parameters, and earlier calculations.
adjustedBasisAdjusted cost basis of relinquished property
originalPurchasePrice + capitalImprovements - accumulatedDepreciation
totalGainTotal realized gain on sale
salePrice - sellingCosts - adjustedBasis
capitalGainCapital gain before depreciation recapture
max(0, salePrice - sellingCosts - originalPurchasePrice - capitalImprovements)
depreciationRecaptureDepreciation recapture amount
min(accumulatedDepreciation, max(0, totalGain))
pureCapitalGainCapital gain after depreciation recapture
max(0, totalGain - depreciationRecapture)
capGainsTaxFederal capital gains tax
pureCapitalGain * capitalGainsTaxRate
recaptureTaxDepreciation recapture tax
depreciationRecapture * depreciationRecaptureRate
stateTaxState capital gains tax
max(0, totalGain) * stateTaxRate
niitTaxNet Investment Income Tax
pureCapitalGain * niitRate
totalTaxWithoutTotal tax liability without 1031 exchange
capGainsTax + recaptureTax + stateTax + niitTax
netProceedsNet proceeds from sale
salePrice - sellingCosts
bootReceivedTaxable boot received from exchange
max(0, netProceeds - (replacementPrice - replacementMortgage))
partialTaxTax on partial exchange (boot only)
min(totalTaxWithout, bootReceived * (capitalGainsTaxRate + stateTaxRate + niitRate))
isFullExchangeFull deferral requires equal-or-greater replacement value AND all equity reinvested (no cash boot)
if(replacementPrice >= salePrice && bootReceived <= 0, 1, 0)
totalTaxWithTotal tax liability with 1031 exchange
if(isFullExchange == 1, 0, partialTax)
taxSavingsTax savings from 1031 exchange
totalTaxWithout - totalTaxWith
effectiveTaxRateEffective tax rate as percentage of total gain
if(totalGain > 0, (totalTaxWithout / totalGain) * 100, 0)
savingsPercentagePercentage of tax liability deferred
if(totalTaxWithout > 0, (taxSavings / totalTaxWithout) * 100, 0)
exchangeGapInverse of savings percentage for threshold evaluation
100 - savingsPercentage
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