1031 Exchange Boot Calculator
Work out the taxable boot in a 1031 like-kind exchange and the 2026 tax on it. Enter the sale, the loans and the replacement property. The tool nets debt relief against cash you add, caps the taxable amount at your realized gain, and splits it into depreciation gain and long-term gain.
A 1031 exchange boot calculator works out how much of a like-kind exchange is taxable. Boot is anything you receive that is not like-kind real property: cash, other property, or a net drop in mortgage debt. The gain you must recognize is the smaller of the boot you receive and the gain you realize on the property you sell.
How boot in a 1031 exchange is calculated
The calculator follows the order used on IRS Form 8824 and in IRS Publication 544 (Partially Nontaxable Exchanges):
- Realized gain = sale price minus selling and exchange costs minus adjusted basis.
- Cash boot = cash or other non-like-kind property you take out. Exchange costs paid from the sale proceeds reduce it, because they leave less cash to come back to you.
- Mortgage boot = loan paid off on the property sold, minus the new loan on the replacement, minus cash you add. It cannot go below zero.
- Total boot = cash boot plus mortgage boot.
- Recognized gain = the smaller of total boot and realized gain. A loss is never recognized.
- Basis of the replacement = old adjusted basis plus new loan plus cash added, minus old loan, minus cash received, plus gain recognized.
The netting only works one way. Under Treasury Regulation 1.1031(d)-2, cash you pay in offsets debt relief, but taking on a bigger loan does not offset cash you receive. If you leave both cash boxes blank, the tool works them out from the prices and loans so the figures always balance.
1031 exchange boot calculator: worked example
Press Load Example to run these figures: a married couple filing jointly with $180,000 of other income sells a rental for $800,000 and buys a $650,000 replacement.
| Step | Working | Result |
|---|---|---|
| Realized gain | $800,000 − $40,000 costs − $350,000 basis | $410,000 |
| Cash boot | ($800,000 − $40,000 − $400,000 loan) − ($650,000 − $300,000 new loan) | $10,000 |
| Mortgage boot | $400,000 − $300,000 − $0 cash added | $100,000 |
| Total boot | $10,000 + $100,000 | $110,000 |
| Recognized gain | smaller of $110,000 and $410,000 | $110,000 |
| Deferred gain | $410,000 − $110,000 | $300,000 |
| Tax on depreciation gain | $60,000 × 22% (their bracket, below the 25% cap) | $13,200 |
| Tax on remaining gain | $50,000 × 15% | $7,500 |
| Net investment income tax | 3.8% × ($290,000 − $250,000) | $1,520 |
| State tax at 5% | $110,000 × 5% | $5,500 |
| Total tax on the boot | $13,200 + $7,500 + $1,520 + $5,500 | $27,720 |
| Basis of the replacement | $350,000 + $300,000 − $400,000 − $10,000 + $110,000 | $350,000 |
To defer everything in this example the couple would need a replacement worth at least the $760,000 net sale value and no net drop in debt that is not covered by their own cash.
How the 2026 federal tax on boot is worked out
Recognized gain is taxed in layers. The part that comes from depreciation you claimed is unrecaptured section 1250 gain, taxed at your ordinary rate but never above 25% (IRS Topic 409). The rest is long-term gain taxed at 0%, 15% or 20%, stacked on top of your other taxable income. The 2026 figures below come from IRS Revenue Procedure 2025-32 (sections 4.01, 4.03 and 4.14).
| Filing status (2026) | 0% rate up to | 15% rate up to | Standard deduction | NIIT starts above |
|---|---|---|---|---|
| Single | $49,450 | $545,500 | $16,100 | $200,000 |
| Married filing jointly | $98,900 | $613,700 | $32,200 | $250,000 |
| Head of household | $66,200 | $579,600 | $24,150 | $200,000 |
| Married filing separately | $49,450 | $306,850 | $16,100 | $125,000 |
The 0% and 15% limits are taxable-income figures; gain above the 15% limit is taxed at 20%. The 3.8% net investment income tax applies to the smaller of your net investment income and the amount by which modified adjusted gross income exceeds the threshold, and the IRS notes those thresholds are not indexed for inflation. State tax is whatever rate you enter; the tool does not look up state rules.
Three ways to bring boot down to zero
- Buy equal or up. A replacement that costs at least your net sale value (price minus exchange costs) leaves no cash to come back.
- Replace the debt or add cash. A smaller new loan is mortgage boot unless you cover the gap with your own money.
- Leave the proceeds with the intermediary. Cash you take out is boot even if you borrow more on the new property.
The exchange itself must also qualify: replacement property identified within 45 days and received within 180 days of the sale, or by the due date of your return with extensions if that is earlier (26 U.S.C. 1031(a)(3)).
What this calculator does not cover
This is an estimate for one relinquished and one replacement property, not tax advice. It does not handle exchanges with a related party (a two-year holding rule applies), property used partly as your home, boot received as a seller-financed note and taxed under the installment method, non-like-kind property you give up, or exchanges of several properties. It treats all your other income as ordinary income, assumes straight-line depreciation with no gain taxed as ordinary recapture, and ignores other capital gains or losses, suspended passive losses and the alternative minimum tax. Closing-statement items such as prorated rent, security deposits, property taxes and repairs are not exchange expenses, so leave them out of the costs box. Have a qualified intermediary and a tax professional check the figures before you close.
Sources: IRS Publication 544 (2025), Instructions for Form 8824, Treasury Regulation 1.1031(d)-2, IRS Revenue Procedure 2025-32, IRS Topic 409, IRS Net Investment Income Tax page. Last updated: October 2026.
Frequently Asked Questions
What is boot in a 1031 exchange?
Boot is anything you receive in a like-kind exchange that is not like-kind real property: cash, other property, or a net reduction in mortgage debt. Receiving boot does not cancel the exchange. It makes part of your gain taxable, up to the smaller of the boot received and the gain you realized.
Can I add cash to offset mortgage boot?
Yes. Cash you pay in at the replacement closing offsets a drop in debt dollar for dollar. The reverse does not work: under Treasury Regulation 1.1031(d)-2, taking on a larger loan does not offset cash you receive, so cash taken out is boot even when the new mortgage is bigger.
How is boot taxed in a 1031 exchange?
The recognized gain is taxed in layers. The part that comes from depreciation you claimed is unrecaptured section 1250 gain, taxed at your ordinary rate up to a 25% maximum. The rest is long-term gain taxed at 0%, 15% or 20%. For 2026 the 15% rate ends at $545,500 of taxable income for single filers and $613,700 for joint filers. A 3.8% net investment income tax can apply above $200,000 (single) or $250,000 (joint), plus any state tax.
Do closing costs reduce boot in a 1031 exchange?
Exchange expenses such as broker commissions, attorney fees and deed preparation fees reduce the amount realized, and IRS Publication 544 says to subtract them from the cash or other property received before figuring the recognized gain. Items like prorated rent, security deposits, property taxes and repairs are not exchange expenses.
What are the 1031 exchange deadlines?
You must identify replacement property within 45 days of transferring the property you sell and receive it within 180 days, or by the due date of your tax return including extensions if that comes first. You can identify up to three properties, or more if their total value is no more than 200% of the value of what you sold.
Does section 1031 apply to a vacation home?
Only if it is held for investment or business use. IRS Revenue Procedure 2008-16 gives a safe harbor: you own the home for at least 24 months, and in each 12-month period you rent it at a fair rent for 14 days or more and limit personal use to the greater of 14 days or 10% of the days rented. Property used partly as your main home needs a separate calculation that this tool does not do.
What is the basis of the replacement property?
Start with the adjusted basis of the property you gave up, add the new loan and any cash you paid in, subtract the old loan and any cash you received, then add the gain you recognized. When the figures balance, this equals the replacement price minus the deferred gain, which is how the deferred gain carries forward until you sell.