1031 Exchange Calculator

Key Takeaways

• 1031 Exchange Calculator estimates taxable gain of $217,500 and depreciation recapture tax (25%) of $15,000 for this scenario.
• On a $750,000 sale with $45,000 of selling costs, the amount realized is $705,000. Against an adjusted basis of $487,500, the taxable gain is $217,500. That single number drives everything that follows: every dollar of tax on a taxable sale is some percentage of this $217,500.
• About $54,765 on a $217,500 gain: $15,000 of depreciation recapture at 25%, $31,500 of capital gains at 20%, $8,265 of NIIT at 3.8%, plus any state tax. That is an effective 25.2% on the gain, leaving $650,235 of the $705,000 proceeds after tax.

Calculation Output

Result Chart

Key Facts

How This Estimate Works

• On a $750,000 sale with $45,000 of selling costs, the amount realized is $705,000. Against an adjusted basis of $487,500, the taxable gain is $217,500. That single number drives everything that follows: every dollar of tax on a taxable sale is some percentage of this $217,500.
• Depreciation is the part most sellers underestimate. You claimed $60,000 of depreciation over the holding period, and up to $60,000 of the gain is recaptured — taxed at a flat 25%, for $15,000 — before the capital-gains rate even touches it. Investors who ran a cost-segregation study front-loaded this number on purpose; the recapture rules are where that strategy's bill comes due at sale, which is exactly why the depreciation input here matters so much. The remaining $157,500 of gain is taxed at your 20% capital-gains rate, or $31,500.
• The federal stack does not stop at those two layers. Net investment income tax at 3.8% adds $8,265 on the gain (it applies when your income is over the NIIT thresholds — this estimate assumes it applies, so treat it as the high-side case), and no state tax is modeled here — if your state taxes capital gains, add that layer to the total. All in, a straight taxable sale costs $54,765 in tax — an effective 25.2% on the $217,500 gain. After tax, the sale puts $650,235 in your pocket.
• The 1031 exchange flips that arithmetic. Reinvest the full $705,000 into like-kind property and $54,765 of tax is deferred — not eliminated, but pushed into the replacement property's basis — while the full $705,000 stays at work instead of $650,235. At 25% down that is $2,820,000 of buying power versus $2,600,940 if you paid the tax first. The deferred $54,765 is 7.8% of the sale proceeds working for you instead of going to the IRS. This scenario takes no cash out, so the full exchange qualifies and none of the gain is taxed today. Any cash you do pull out — called boot — is taxed first, before the rest of the gain gets its deferral.
• The exchange buys that deferral on a strict clock. From the day the relinquished property closes, you have 45 calendar days to identify the replacement property in writing and 180 calendar days to close on it — both clocks run from the same sale date, so a late identification leaves barely four months to close. The property must be like-kind (investment or business real estate for investment or business real estate), and a qualified intermediary must hold the proceeds; touching the cash yourself between sales kills the exchange. These are the rules that disqualify exchanges most often, not the tax math.
• This is a planning estimate, not an engineered tax calculation and not tax advice. It applies the 25% recapture rate, your stated capital-gains rate, a 3.8% NIIT, and your state rate to the inputs above; it cannot see your actual basis adjustments, passive-activity carryforwards, prior like-kind exchanges, installment-sale treatment, or whether you clear the NIIT income thresholds. A filing-grade answer — the kind that holds up under IRS examination — needs a CPA who knows your full return. Use this page to decide whether that conversation is worth having, then have it.

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