1031 Exchange Calculator
Sale, basis, and boot to realized and deferred gain.
What it does
Section 1031 lets investment property change shape without an immediate tax bill. Gain realized on the sale divides into recognized boot taxed now and deferred gain riding into the replacement. Three subtractions preview the split.
The tool above takes sale price, adjusted basis, and boot, then prints realized, recognized, and deferred dollars. Recognized is the smaller of realized gain and boot; deferred is the rest. Losses recognize and defer nothing.
IRS like-kind rules and realtor exchange guides teach this same split with the 45-day identification and 180-day closing clocks run through a qualified intermediary. Depreciation recapture can surface inside the recognized slice, so basis history matters.
Use it to price boot, not to bless the deal. Qualification, related parties, and timing decide whether deferral survives audit. Walk the exchange with an intermediary and a tax pro before touching proceeds.
How to use
- Enter the sale price.
- Enter adjusted basis.
- Enter boot: cash plus debt relief.
- Read realized, recognized, and deferred gain.
- Plan boot to steer current tax.
- Close through an intermediary on time.
Formula
- sale
- Sale price of the relinquished property.
- basis
- Adjusted basis after depreciation.
- boot
- Cash plus net debt relief received.
Losses recognize nothing and defer nothing. Boot includes cash plus net mortgage relief. Like-kind and timing rules decide whether the deferral stands; an intermediary and the 45/180-day clocks are part of every valid deal.
Worked example
Example: $20,000 boot on $180,000 gain
$500,000 sale, $320,000 basis, $20,000 cash boot.
- Sale is $500,000, basis $320,000, boot $20,000.
- Realized: 500000 - 320000 = $180,000.00.
- Recognized: smaller of 180000 and 20000 = $20,000.00.
- Deferred: 180000 - 20000 = $160,000.00.
- Only the boot is taxed now; the rest rolls over.
Reference table
| Boot | Taxed now | Deferred |
|---|---|---|
| $0 | $0.00 | $180,000.00 |
| $20,000 | $20,000.00 | $160,000.00 |
| $60,000 | $60,000.00 | $120,000.00 |
| $180,000 | $180,000.00 | $0.00 |
| Over gain | $180,000.00 | $0.00 |
Limits
- Federal gain only. State rules and recapture vary.
- Needs qualifying property and timelines.
- Boot valuation disputes sit outside math.
- Not tax advice; use an intermediary.
Common mistakes
- Counting boot above realized gain.
- Touching proceeds without an intermediary.
- Missing the 45-day identification clock.
- Forgetting debt relief is boot.
- Deferring a loss for no benefit.
Try it yourself
Quick checks. Answers sit tucked under each question.
Full $750,000 exchange with $700,000 basis, no boot?
Realized is 750000 - 700000 = $50,000. Boot is 0, so recognized $0.00 and deferred $50,000.00.
$400,000 sale on $450,000 basis?
Realized is 400000 - 450000 = -$50,000.00. Recognized $0.00, deferred -$50,000.00: a disallowed loss, not a deferral.
Questions
What counts as boot?
Cash plus net debt relief: anything of value beyond the replacement property. Boot makes gain taxable up to the realized amount. Zero boot on a full exchange defers everything.
What is realized vs recognized gain?
Sale price minus adjusted basis, same as any sale. The exchange defers tax on it; it does not erase it. Depreciation recapture rules still bite within the recognized slice.
Does deferred mean forgiven?
No. Exchanges defer; heirs and basis step-ups end the story differently. Track deferred gain in the replacement basis or the bill surprises years later.
What property qualifies?
Same-kind real property held for investment or business: rentals, land, offices swap with each other. Personal homes, flips, and partnership interests sit outside.
What are the deadlines?
45 days to identify replacements and 180 days to close, with a qualified intermediary holding funds. Touching the cash breaks the exchange.
What if the sale loses money?
A loss exchange recognizes nothing and defers nothing useful; losses stay disallowed. Sell taxable instead, or hold. Run the loss math before paying exchange fees.