1031 Exchange Calculator
Compare selling and paying taxes vs. deferring with a §1031 exchange.
Estimate only — for illustrative purposes; does not constitute financial, tax or legal advice. Always consult with a CPA/tax advisor.
Questions? Talk to a Sherpa →Property & Sale
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Net Sales Proceeds is the gross sales price minus closing costs (real estate commission, title insurance, transfer taxes, escrow, attorney fees, recording, etc.).
As a rule of thumb, total seller closing costs typically run 6–8% of the gross sales price for most investment real estate. High-transfer-tax markets (NYC, CA cities, Chicago, DC, NJ, Phila., Pittsburgh) can push this to 8–10%+. Larger institutional deals ($25M+) trend lower at 2–4%.
Note: high-value sales in CT, NY, NYC, and NJ may also trigger a separate Mansion Tax (NY/NYC/NJ: 1% over $1M, with NYC tiered up to 3.9%; CT: 2.25% over $2.5M). Mansion taxes are typically residential-only — verify whether your investment property qualifies.
As a rule of thumb, total seller closing costs typically run 6–8% of the gross sales price for most investment real estate. High-transfer-tax markets (NYC, CA cities, Chicago, DC, NJ, Phila., Pittsburgh) can push this to 8–10%+. Larger institutional deals ($25M+) trend lower at 2–4%.
Note: high-value sales in CT, NY, NYC, and NJ may also trigger a separate Mansion Tax (NY/NYC/NJ: 1% over $1M, with NYC tiered up to 3.9%; CT: 2.25% over $2.5M). Mansion taxes are typically residential-only — verify whether your investment property qualifies.
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Capital Improvements are the running total of all expenditures you've capitalized over the hold period. You can enter an estimate here, but refer to your CPA's depreciation schedule for the exact amount.
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Cost Segregation & Bonus Depreciation
This estimate uses straight-line MACRS only (27.5 yr residential / 39 yr commercial). If you performed a cost segregation study or claimed bonus depreciation, switch the toggle to Enter and input your actual accumulated depreciation from your CPA's depreciation schedule.
Important: the portion of your depreciation attributable to §1245 personal property (5-, 7-, and some 15-year assets such as carpet, removable fixtures, and equipment) is recaptured at ordinary income rates — not the 25% §1250 cap shown by this calculator.
Post-TCJA (2017), §1031 covers real property only. The §1245 personal-property portion typically does not qualify for deferral and may trigger immediate tax even within a §1031 exchange. Consult & confirm with your CPA/tax advisor to model the §1245 vs §1250 split.
This estimate uses straight-line MACRS only (27.5 yr residential / 39 yr commercial). If you performed a cost segregation study or claimed bonus depreciation, switch the toggle to Enter and input your actual accumulated depreciation from your CPA's depreciation schedule.
Important: the portion of your depreciation attributable to §1245 personal property (5-, 7-, and some 15-year assets such as carpet, removable fixtures, and equipment) is recaptured at ordinary income rates — not the 25% §1250 cap shown by this calculator.
Post-TCJA (2017), §1031 covers real property only. The §1245 personal-property portion typically does not qualify for deferral and may trigger immediate tax even within a §1031 exchange. Consult & confirm with your CPA/tax advisor to model the §1245 vs §1250 split.
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Placed in Service is the date the property became ready and available for its intended use — for rental real estate, when it was available to rent. Depreciation begins from this date.
For most investors it matches the purchase date, but it can come later — for example, if renovations delayed the property from being rent-ready, or if the owner lived in the property for several years before converting it to a rental (the placed-in-service date would be the conversion date, not the original purchase).
Estimated Accumulated Depreciation
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Assumes ~85% of the purchase price is depreciable building (land excluded), plus 100% of capital
improvements, each depreciated straight-line (MACRS) from its own in-service year.
Excludes cost segregation and bonus depreciation.
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Suspended passive losses are losses from passive activities (typically rental real estate) that exceeded your passive income in prior years and couldn't be deducted then. Under IRC §469 they carry forward until you have passive income to absorb them — or you fully dispose of the property.
On a fully taxable sale, suspended losses release and offset the LTCG portion of the gain. Depreciation recapture (taxed at up to 25% under IRC §1(h)(1)(D)) is not reduced by PAL. In a §1031 the sale isn't fully taxable, so the losses stay suspended and carry over to the replacement property — they only reduce the "Sell & Pay Tax" scenario below.
On a fully taxable sale, suspended losses release and offset the LTCG portion of the gain. Depreciation recapture (taxed at up to 25% under IRC §1(h)(1)(D)) is not reduced by PAL. In a §1031 the sale isn't fully taxable, so the losses stay suspended and carry over to the replacement property — they only reduce the "Sell & Pay Tax" scenario below.
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Tax Profile
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Use Advanced mode for the exact bracket-by-bracket calculation. Since your gain stacks on top of ordinary income, a single gain can span multiple brackets. Advanced mode captures the 0% bracket if it applies to you.
Simple mode applies NIIT (3.8%) to the entire taxable gain (after any suspended PAL is applied). Switch to Advanced for the IRS rule that taxes only the portion of MAGI above $200k Single / $250k MFJ.
Simple mode applies NIIT (3.8%) to the entire taxable gain (after any suspended PAL is applied). Switch to Advanced for the IRS rule that taxes only the portion of MAGI above $200k Single / $250k MFJ.
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LTCG rates are tiered by total taxable income, with breakpoints set by filing status (2026):
15% — taxable income up to $545,500 (Single) / $613,700 (MFJ)
20% — above those amounts
Use Advanced mode for the exact bracket-by-bracket calculation, if your gain could potentially span across brackets or if you are not sure.
A 0% bracket exists for taxable income up to ~$49k Single / ~$99k MFJ, but real estate sellers virtually always exceed this threshold once the gain stacks on top of ordinary income — so Simple mode only offers 15% and 20%.
15% — taxable income up to $545,500 (Single) / $613,700 (MFJ)
20% — above those amounts
Use Advanced mode for the exact bracket-by-bracket calculation, if your gain could potentially span across brackets or if you are not sure.
A 0% bracket exists for taxable income up to ~$49k Single / ~$99k MFJ, but real estate sellers virtually always exceed this threshold once the gain stacks on top of ordinary income — so Simple mode only offers 15% and 20%.
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For a reasonable estimate, enter your taxable income from your most recent return (Form 1040, line 15).
If you don't have your tax return handy or if your income will be materially different this year, taxable income ≈ all income (wages, business/rental income, interest, dividends, retirement distributions, etc.) minus the standard deduction (~$16,150 Single / ~$32,300 MFJ / ~$24,250 HoH for 2026) or itemized deductions. Add back any foreign income exclusions.
If you don't have your tax return handy or if your income will be materially different this year, taxable income ≈ all income (wages, business/rental income, interest, dividends, retirement distributions, etc.) minus the standard deduction (~$16,150 Single / ~$32,300 MFJ / ~$24,250 HoH for 2026) or itemized deductions. Add back any foreign income exclusions.
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Toggle Yes if the property is located in a different state than where you (the seller) live. The calculator will then compute the source-state non-resident tax + residence-state tax with a credit for source-state taxes paid.
Most states require non-resident withholding at closing (e.g., CA Form 593, NY IT-2663, MD MW-506AE). That's a prepayment toward your source-state liability — not an additional tax.
Note: locality-level taxes that are residency-based (NYC, Philadelphia SIT, etc.) tied to your residence state aren't modeled separately here — consult your CPA if you live in such a locality.
Most states require non-resident withholding at closing (e.g., CA Form 593, NY IT-2663, MD MW-506AE). That's a prepayment toward your source-state liability — not an additional tax.
Note: locality-level taxes that are residency-based (NYC, Philadelphia SIT, etc.) tied to your residence state aren't modeled separately here — consult your CPA if you live in such a locality.
Results
Tax Deferral via §1031 (Estimated)
$0
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Sell & Pay Tax
$0
Net cash after tax & debt (Estimated)
§1031 Exchange
$0
Equity to reinvest (Estimated)
Gain Calculation (Estimated)
Adjusted Cost Basis$0
Total Gain$0
Depreciation Recapture$0
Capital Gain Portion$0
Tax If You Sell (Estimated)
Federal — Recapture (25%)$0
Federal — LTCG$0
NIIT (3.8%)
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Net Investment Income Tax (NIIT) — A 3.8% federal surtax on investment income (capital gains, dividends, rental income, etc.) under IRC §1411, enacted as part of the ACA.
Applies when modified adjusted gross income (MAGI) exceeds: $200K Single/HoH, $250K MFJ, $125K MFS.
Computed as 3.8% × the lesser of (a) net investment income, or (b) MAGI − threshold. So a high-income filer with a $1M gain pays $38K NIIT; a lower-income filer with the same gain pays less (or zero).
A §1031 exchange defers NIIT along with the regular capital gains tax. On a fully taxable sale, NIIT applies to the entire recognized gain (including depreciation recapture). $0
Applies when modified adjusted gross income (MAGI) exceeds: $200K Single/HoH, $250K MFJ, $125K MFS.
Computed as 3.8% × the lesser of (a) net investment income, or (b) MAGI − threshold. So a high-income filer with a $1M gain pays $38K NIIT; a lower-income filer with the same gain pays less (or zero).
A §1031 exchange defers NIIT along with the regular capital gains tax. On a fully taxable sale, NIIT applies to the entire recognized gain (including depreciation recapture). $0
State Tax
$0
Total Tax (Estimated)$0
Net Proceeds
Sales Proceeds$0
Less Mortgage Payoff$0
Less Taxes$0
Sell & Pay — Net Cash (Estimated)$0
Effective tax rate & assumptions
Effective rate on gain0%
NIIT threshold used—
State rate used—
What happens if you reinvest? See the return your taxed dollars would need to earn to match a §1031 exchange. ▸
Reinvestment Assumptions (Hypothetical)
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The annual income a replacement property or DST is assumed to distribute, taken as income (not reinvested), as a % of your invested equity. You set this — it's your assumption, not a quote or guarantee.
%
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Assumed annual growth in the property's value, as a %. Real estate appreciation varies by market and is never guaranteed. Enter a figure you're comfortable stress-testing.
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How long you hold before a taxable exit. DSTs are typically illiquid 5–10 year holds. Longer holds amplify the compounding advantage of deferring tax.
years
Enter your assumptions above to see your break-even return.
How this is calculated
§1031 total value = (cash flow × equity × years) + (equity × (1 + appreciation)years)
Break-even rate = (that total ÷ after-tax cash)1/years − 1
Assumes DST cash flow is taken as income (not reinvested), level on invested equity; appreciation compounds in retained equity. Pre-tax comparison — ignores fees, depreciation shelter, annual cash-flow taxation, and tax due on a future taxable exit. The §1031 path's own deferred tax is not modeled here (potentially eliminated via step-up at death — ask a Sherpa).
Break-even rate = (that total ÷ after-tax cash)1/years − 1
Assumes DST cash flow is taken as income (not reinvested), level on invested equity; appreciation compounds in retained equity. Pre-tax comparison — ignores fees, depreciation shelter, annual cash-flow taxation, and tax due on a future taxable exit. The §1031 path's own deferred tax is not modeled here (potentially eliminated via step-up at death — ask a Sherpa).
⚠ Hypothetical illustration only. The figures above are not a projection, forecast, guarantee, or offer, and do not reflect any specific investment. You supply the assumed rates; actual results will differ. Past performance is not indicative of future results. Delaware Statutory Trust (DST) interests are securities that involve substantial risk, including possible loss of principal, illiquidity (limited or no secondary market), and reliance on the sponsor, and are available only to accredited investors. A §1031 exchange defers — does not eliminate — tax; deferred tax generally becomes due on a later taxable disposition unless further deferred or, under current law, eliminated via step-up at death. This tool does not account for fees, loads, depreciation recapture on a future sale, annual taxation of cash flow, or your individual circumstances. This is not tax, legal, or investment advice and does not create an advisory relationship. Consult & confirm with your CPA/tax advisor and a licensed investment professional before acting. See full disclaimer at calculator.1031sherpa.com/privacy.html.
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Estimate only. This calculator is for illustrative purposes and does not constitute financial, tax or legal advice.
Federal recapture rates, LTCG brackets, NIIT thresholds, and state rates change; always confirm with a qualified CPA
or tax advisor before relying on any §1031 strategy.
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