About this tool
1031 Exchange Capital Gains Deferral Calculator is a free, in-browser tool that estimates how much tax a like-kind (Section 1031) exchange would let you defer when selling an investment property. It breaks the bill into the depreciation-recapture tax and the capital-gains tax, then totals what the exchange defers. Every figure stays on your device.
The realized gain is sale price − selling costs − adjusted cost basis. The depreciation-recapture tax is accumulated depreciation × recapture rate ÷ 100 (25% by default in the US). The remaining capital-gains portion is the realized gain minus depreciation (floored at zero), taxed at your combined federal, state and NIIT rate: portion × (federal + state + NIIT) ÷ 100. The total tax deferred is the sum of the recapture and capital-gains tax.
Use it to weigh whether a 1031 exchange is worth pursuing by seeing the tax you would otherwise owe on a straight sale. Every rate is entered by you — nothing is looked up — so always confirm the numbers and rules with a qualified tax professional before acting.
Frequently asked questions
What is the realized gain?
It is your sale price minus selling costs minus the adjusted cost basis (original price plus improvements, less prior depreciation). It is the total economic gain on the sale before splitting it into the recapture and capital-gains pieces.
Why are depreciation and capital gains taxed separately?
Depreciation you claimed is 'recaptured' at its own rate (25% in the US) when you sell, while the gain above your depreciation is taxed at capital-gains rates. The tool subtracts depreciation from the realized gain so each portion is taxed once, at the correct rate.
What is the NIIT field for?
The Net Investment Income Tax is a US surtax (3.8%) that can apply to real-estate gains above certain income thresholds. Enter 3.8 if it applies to you, or leave it at 0. It is added to your federal and state rates on the capital-gains portion.
Is this tax advice?
No. Every rate and figure is one you enter, and the tool applies no live tax tables. A 1031 exchange has strict timing and qualification rules, so treat this as a rough estimate and consult a tax professional or qualified intermediary. All calculations run in your browser.
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