1031 Exchange Gain Estimator
Estimate recognized and deferred gain, cash boot, debt relief and confirmed ordinary recapture for a U.S. real-property exchange.
What This Calculator Does
Compare recognized and deferred gain for one qualifying U.S. 1031 real-property exchange using documented prices, debt, complete adjusted basis and eligible expenses on both sides. Supply ordinary recapture already determined for Form 8824, line 21. The ledger shows how boot and that ordinary amount interact; it does not calculate tax owed or determine eligibility.
Who Is This For
Property investors and real-estate professionals reviewing an exchange with a qualified intermediary and tax adviser. Use amounts for the same taxpayer and ownership interest. Available exchange equity must fund the replacement first, with personal cash covering only a shortfall; separate cash withdrawals combined with personal contributions are outside the model. The tool does not split an exchange among owners or assets, prepare Form 8824 or establish the basis of the replacement property.
How It Works
Enter all eight amounts in USD with cents, including explicit 0 where appropriate. Keep eligible sale expenses and eligible replacement acquisition expenses separate, and supply the complete adjusted basis. Enter ordinary recapture from an outside line 21 determination; use 0 only when its absence is confirmed. Confirm the assumptions, calculate and review the gain, boot and recapture ledger before exporting the result.
Frequently Asked Questions
Is recognized gain the tax I owe?
No. Realized gain is the sale price minus eligible exchange expenses on both sides and the complete adjusted basis. Recognized gain is the part included in the current gain calculation under the modeled rules; deferred gain is the positive gain left over. Tax rates, the character of all remaining gain, NIIT, state tax and withholding are not calculated. Even a result of 0 recognized gain does not establish a zero tax bill.
Which properties and deadlines should I review first?
Section 1031 generally concerns qualifying like-kind real property held for investment or use in a trade or business. A personal residence or property held primarily for sale does not fit this estimator’s scope. In a deferred exchange, identification generally must occur within 45 days; receipt is generally due by the earlier of 180 days or the tax-return due date, including extensions. Your qualified intermediary and tax adviser must confirm the property, structure, deadlines and receipt-of-funds requirements. The calculator does not approve an exchange.
What belongs in adjusted basis, and does mortgage payoff reduce gain?
Use the complete adjusted tax basis determined from your records, including the applicable original basis, eligible original acquisition costs and capital improvements, less required reductions such as allowed or allowable depreciation. Do not use only the original purchase price or subtract depreciation a second time. Mortgage principal repayment affects the equity and debt-relief calculations, not realized gain. Original acquisition costs belong in the supplied basis when applicable; expenses of acquiring this exchange’s replacement property belong in their separate field.
Why are exchange expenses entered on both sides?
IRS Publication 544 addresses eligible exchange expenses paid in connection with both the relinquished and replacement properties. Under this model, confirmed eligible sale and replacement acquisition expenses reduce realized gain and offset cash boot. The intermediary or adviser must classify each charge; a closing statement alone does not make it eligible. Exclude tax and rent prorations, deposits, repairs and loan expenses, and avoid counting the same acquisition charge in expenses, price or basis. The equity and net cash boot shown are tax-ledger amounts, not the actual escrow balance or closing wire.
How do cash boot and debt-relief boot work?
Boot is non-like-kind consideration reflected here as net cash or net debt relief. The model compares equity after all eligible exchange costs with the equity applied to the replacement price. Available exchange equity funds the replacement first; personal cash only covers a shortfall. Additional cash invested can offset debt relief, but taking on more new debt does not erase cash boot. The old debt is assumed fully repaid without forgiveness, and replacement debt cannot exceed the replacement price. Separate cash withdrawals combined with personal contributions, and other complex flows, need review outside this model.
Why isn’t ordinary recapture simply added to the boot limit?
The line 21 ordinary recapture amount is recognized first; other recognized gain is the boot-limited gain minus that amount, with a minimum of 0. For example, with no exchange costs: sale $220,000, basis $100,000, old debt $80,000, replacement price $250,000 and new debt $150,000 produce $120,000 realized gain and $40,000 boot. If externally determined ordinary recapture is $50,000, total recognized gain is $50,000 and deferred gain is $70,000, not $90,000 recognized. Do not substitute accumulated depreciation or unrecaptured Section 1250 gain for the ordinary amount.
What happens if there is no replacement purchase or I have a loss?
An explicit replacement price of 0 models an exchange that did not complete; positive realized gain is fully recognized in that scenario. A realized loss remains negative, but no loss is recognized through this 1031 estimate and deferred gain is 0. These results do not establish a deductible loss, refund or tax credit. Enter ordinary recapture 0 if there is no positive gain; have your adviser determine the treatment of a failed exchange or loss outside the tool.
What needs a separate professional calculation?
Eligibility, the complete adjusted basis, expense qualification and Form 8824 line 21 must be determined outside this tool. It does not allocate multiple assets, calculate replacement basis, combine Section 121 with 1031, model installment sales or apply related-party rules. Review the closing statements and financing with your qualified intermediary and tax adviser. The cited IRS Publication 544 and Form 8824 instructions are the 2025 editions, checked October 2, 2026 for this estimate using rules as of September 30, 2026.