This tool calculates the potential capital gains tax deferral on your 1031 exchange property transaction.
1031 Exchange Calculator
Use this calculator to determine the cash difference after executing a 1031 Exchange.
How to Use:
- Enter the Sale Price of the Relinquished Property.
- Enter the total Closing Costs associated with selling the Relinquished Property.
- Enter the Cost of the Replacement Property you plan to purchase.
- Enter the Depreciation Recapture amount (if applicable).
- Enter the Capital Gain from the sale of the old property.
- Click “Calculate” to see the result in the “Result” field.
How It Calculates:
The calculator performs the following steps to provide the result:
- Subtracts the Closing Costs from the Sale Price of the Relinquished Property to get the Net Sale Proceeds.
- Subtracts the Cost of the Replacement Property from the Net Sale Proceeds.
- Adds any Depreciation Recapture and Capital Gain amounts to the resulting figure.
This final number indicates the cash left or needed after the exchange.
Limitations:
- This calculator is a basic tool and does not account for tax implications or other detailed financial considerations.
- Results are estimates; consult with a financial professional for accurate and personalized advice.
Use Cases for This Calculator
Calculating Potential Tax Savings
Enter the estimated selling price of your property and the potential replacement property value to instantly calculate the potential tax savings from a 1031 exchange. This will help you understand how much you can save on capital gains taxes.
Determining Deferred Gain
Input the adjusted basis of your property, the selling price, and the closing costs to determine the deferred gain by deferring the taxes through a 1031 exchange. This will give you a clear picture of your tax liability.
Estimating Investment Property Value
Fill in the existing loan balance, depreciation recapture tax rate, and federal & state capital gains tax rates to estimate the value of your potential replacement property in a 1031 exchange.
Analyzing Total Capital Gain
Provide details of the selling price, adjusted basis, depreciation, and costs involved to analyze the total capital gain and potential tax liability if you don’t opt for a like-kind exchange.
Comparing Taxable Gain
Compare the taxable gain with and without a 1031 exchange by entering the necessary figures related to both scenarios. This will help you see the significant tax advantages of utilizing a 1031 exchange.
Understanding Exchange Expenses
Estimate the total exchange expenses by entering intermediary fees, title fees, recording fees, and other costs involved in the 1031 exchange process. This will give you a comprehensive view of all expenses.
Forecasting Cash Investment
Input the loan amount, net cash from sale, and other cash expenses to forecast the cash investment required for a potential replacement property after completing a 1031 exchange.
Calculating Depreciation Recapture Tax
Calculate the depreciation recapture tax by entering the accumulated depreciation and the recapture tax rate. This will help you understand the tax implications of a 1031 exchange.
Estimating Exchange Ratio
Input both the fair market value and the mortgage amount of the replacement property to estimate the exchange ratio required for a successful 1031 exchange transaction.
Determining Potential Long-Term Savings
By inputting the holding period, estimated appreciation rate, and the tax rates, determine the potential long-term savings from utilizing a 1031 exchange strategy for your investment properties.