Calculator
1031 exchange calculator
An estimate of the tax a sale of investment or business real estate would trigger, layer by layer, and therefore what a fully reinvested exchange defers. Enter what you know; the results update as you type.
The property
Commissions, transfer taxes, legal and title costs. They reduce the gain.
Total depreciation claimed while you owned it. Unsure? Use the depreciation recapture calculator.
Rates
Leave blank if the state has no income tax.
Optional. Used only for the net investment income tax. Leave blank to apply it to the whole gain.
What a sale would cost
Enter a sale price and a purchase price to see the estimate.
How the estimate is built
- Adjusted basis is the purchase price plus capital improvements minus depreciation taken. Gain is the sale price minus selling costs minus adjusted basis.
- Depreciation recapture. Gain up to the depreciation taken on real property is unrecaptured section 1250 gain, taxed at a maximum federal rate of 25 percent (section 1(h)(1)(E)). The calculator applies 25 percent; a lower ordinary rate can apply to taxpayers in the lowest brackets.
- Capital gains. The rest of the gain is taxed at the long-term rate you select. The calculator assumes the property was held more than one year. The 20 percent rate applies above the section 1(h) thresholds for your filing status.
- Net investment income tax. When selected, 3.8 percent is applied to the lesser of the gain and the amount by which your modified adjusted gross income, including the gain, exceeds the threshold for your filing status ($200,000 single or head of household, $250,000 married filing jointly, $125,000 married filing separately; section 1411(b), not indexed). If you leave income blank, the whole gain is used, which can overstate the tax. The calculator counts only the gain on this sale as investment income, and gain on property used in a non-passive trade or business can be excluded, so the estimate can still differ from the actual tax.
- State tax is applied to the whole gain at the rate you enter. State treatment varies: some states track deferred gain when the replacement property is in another state (California's Form 3840, for example), and Pennsylvania followed 1031 for personal income tax only from 2023. The calculator assumes the state defers the gain along with the federal return.
- What an exchange defers. In a fully reinvested exchange, where the replacement property costs at least as much as the relinquished property net of selling costs and all equity is reinvested, the whole of this tax is deferred. Taking cash or reducing debt without replacing it produces taxable boot.
This is an estimate for orientation, not tax advice. It ignores suspended passive losses, the alternative minimum tax, section 1245 property inside the building, prior exchanges and other items that change the answer. Your tax advisor prepares the actual computation.
Planning a sale?
An exchange must be set up before the sale closes. Read what a 1031 exchange is, or contact onezero3one about acting as qualified intermediary.