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1031 Deferred Gains Calculator

Real estate investors can use a 1031 exchange to avoid paying capital gains taxes on the sale of a property. In a 1031 exchange, the amount of capital gains that are deferred or taxable is based on the specifics of the transaction.

To understand how much of your capital gains can be deferred when exchanging real estate, enter in the details for all of the properties you’re selling (Relinquished Property) and buying (Replacement Property).

How to use the 1031 Exchange Calculator

To perform a 1031 exchange, a real estate investor sells a property (or properties) and uses the funds to acquire new property that are similar. Relinquished Property represents all properties being sold and Replacement Property represents all newly acquired property during the exchange.

To fully defer all capital gains, the generic advice is to exchange “equal or up” - if the newly acquired property has a purchase price & mortgage amount that is the same or higher than the property being sold, all gains can be deferred. If this is not the case, your exchange may have “boot”, which just means some part of the transaction may trigger a taxable capital gain.

Our calculator can help you understand the amount of deferred gains, taxable gains, and types of boot in an exchange. To learn about the full set of rules applicable to a valid 1031 exchange, see Deferred's 1031 Exchange Rules & Checklist.

Understanding 1031 Exchange Inputs


Relinquished Property

For each calculator input, use the total amounts for all properties sold as part of the exchange.

  • Closing & Transaction Costs - All eligible closing costs associated with the sale of the properties. These fall into two categories:
  • Direct costs of selling - these include real estate commissions, title insurance, closing & escrow fees, legal fees, transfer taxes, and recording fees
  • Direct costs of exchange - these include any fees paid to a qualified intermediary or other party facilitating your 1031 exchange.
  • Loan Balance at Close - The loan amount for any mortgage paid off at closing. This is used to determine “mortgage boot” and is a key driver of taxable gains.
  • Adjusted Cost Basis - An accounting value that is used for tax purposes. Usually the original purchase price of the property, which is adjusted from any depreciation, improvements, or damages.
  • Net Cash Received from Sale - The expected net proceeds received from selling the property. We assume this is the cash proceeds that are sent to the qualified intermediary and are eligible for a 1031 exchange.
  • Sale Price - The final sale price for all properties.

Replacement Property

For each calculator input, use the total amounts for all properties bought as part of the exchange.

  • Purchase Price - The total purchase price for all properties.
  • Closing & Transaction Costs - All eligible closing costs associated with the purchase of new property. These fall into two categories.
  • Direct costs of selling - these include real estate commissions, title insurance, closing & escrow fees, legal fees, transfer taxes, and recording fees.
  • Direct costs of exchange - these include any fees paid to a qualified intermediary or other party facilitating your 1031 exchange.
  • Purchase Loan Amount - The amount of any new loans used to complete the purchase of your replacement property. This is used to determine “mortgage boot” and is a key driver of taxable gains.
  • Cash Removed From Exchange - The amount of any cash you wish to remove from the exchange and do not wish to rollover into new property purchases. This amount would be removed from the “Net Cash Received from Sale”, treated as “cash boot” and will be taxed as capital gains.
  • Net Cash Reinvested - The expected net proceeds received from selling the Relinquished property that will be invested into the purchased Replacement property.

Understanding 1031 Exchange Calculator Results

The Potential Gain On Sale is the expected capital gain realized on the sale of the relinquished properties. This incorporates the cost basis of the property and the gains net of any transaction costs.

The capital gains from the property sale have two components - the Deferred Gains and the Taxable Gains Remaining. The Deferred Gains value in the calculator represents any capital gain that is covered as part of the 1031 exchange - while deferred gains may need to be paid at some point in the future, they would not be taxed as part of this transaction.

Taxable Gains Remaining represent the portion of capital gains that could be deferred as part of the exchange, but given the scenario they are not offset by the replacement property and would be taxable. These taxable gains can be generated from Cash Boot or Mortgage Boot. Cash Boot occurs when some cash or property is either removed from the exchange or is ineligible property, resulting in a taxable gain. Mortgage Boot occurs when a loan on the relinquished property is paid off and is not replaced by either an equivalent loan or a new cash investment in the replacement property.