1031 Exchange Tax Savings Calculator
Compute the tax savings from rolling rental property gains into a new investment via a 1031 exchange.
Inputs
Edit any field — results recompute instantly.
Typically ~$8,000-$15,000/yr on residential rentals at $200-400k cost basis.
15% for most middle-income filers, 20% above ~$500k income, 0% below ~$94k joint.
No state cap gains in FL, TX, TN, NV, WA, SD, AK, NH. California is 13.3%, NY ~10%.
Federal recapture is fixed at 25% on residential rental property.
Results
Computed live from your inputs.
The full tax bill above is deferred (not eliminated) via a successful 1031 exchange — capital stays compounding in the next property.
You can reinvest the full gross proceeds (minus closing costs + loan payoff) when 1031-deferring vs. just the after-tax remainder when not.
What this calculator does
A 1031 exchange (Section 1031 of the IRC) lets investors defer capital gains and depreciation recapture taxes when selling investment real estate and reinvesting in like-kind property. This calculator shows the tax bill avoided — capital that stays compounding in the next property instead of going to the IRS.
How to use a 1031 exchange
- Identify the relinquished property and the replacement target(s) before closing on the sale.
- Engage a Qualified Intermediary (QI) BEFORE the sale — the seller cannot take constructive receipt of the proceeds.
- Sale proceeds go to the QI, not to you.
- You have 45 days from sale close to formally identify up to 3 replacement properties.
- You have 180 days from sale close to complete acquisition of one or more identified properties.
- The replacement must be "like-kind" (any US investment real estate counts as like-kind to any other), of equal or greater value, with equal or greater debt assumed.
- Tax on the deferred gain becomes due if/when you ever sell without another 1031. Many investors 1031-stack indefinitely and rely on a step-up in basis at death to eliminate the embedded gain.
Terms worth knowing.
Capitalization Rate (cap rate) is a property's annual NOI divided by its purchase price (or current market value), expressed as a percentage. It's an unlevered yield metric — the return an all-cash buyer would earn before financing.
Net Operating Income (NOI) is a rental property's annual gross rental income minus all operating expenses, before debt service and income taxes. NOI is the denominator of cap rate and the numerator of DSCR — it's the most-used number in rental underwriting.
A cash-out refinance is a mortgage refinance for more than the existing loan balance, with the difference paid to the borrower in cash. Used by BRRRR investors to recover capital after stabilizing a rental property, by long-term holders to access appreciated equity.
More REI math tools.
The Weekly Deal Memo
One market memo, one off-market playbook, one tool review. Every Friday. Free.
No spam. Unsubscribe anytime.