Section 1031 Like-Kind Exchange Tax Deferral Calculator
Section 1031 lets real estate investors defer capital gains by exchanging into like-kind property within 180 days. Done right, this defers 100% of gain + depreciation recapture indefinitely. This tool computes deferred gain, carryover basis, and any boot (taxable cash leftover).
Section 1031 Basics
Sell investment real estate and reinvest gain into like-kind property within 180 days. Defers 100% of capital gain + depreciation recapture. Like-kind includes most US investment real estate (residential rental, commercial, raw land). Primary residences and inventory property do not qualify.
Critical Deadlines and the Qualified Intermediary
Two hard deadlines: (1) Identify replacement property within 45 days of closing on relinquished. (2) Close on replacement within 180 days. Miss either — entire exchange fails and gain is fully taxable. Must use a Qualified Intermediary (QI) to hold proceeds — you cannot touch the cash. Choose QI carefully; QI failures have lost investors millions.
Boot — The Trap That Triggers Tax
Boot = anything you receive that isn't like-kind property. Two forms: (1) Cash boot — leftover cash after exchange. (2) Debt boot — when new debt is less than old debt (debt relief). To avoid boot entirely: equal or greater purchase price + equal or greater debt assumed. Most failed exchanges trigger 10-30% tax on partial boot, not the full gain.
Source: IRS Publication 544, IRS Section 1031, Treasury Reg §1.1031. Last updated: May 2026.