1031 Exchange Calculator

A 1031 exchange (named after Section 1031 of the Internal Revenue Code) allows real estate investors to defer paying capital gains taxes when they sell an investment property and reinvest the proceeds into a like-kind replacement property. It's one of the most powerful tax deferral strategies in real estate.

Key Rules & Deadlines

• Like-kind property: Both the relinquished and replacement properties must be held for investment or business use. Personal residences don't qualify. "Like-kind" is broadly defined — you can exchange an apartment building for raw land, or a retail strip for an office building.
• 45-day identification period: You have exactly 45 calendar days from the sale of your relinquished property to formally identify potential replacement properties in writing.
• 180-day closing deadline: You must close on the replacement property within 180 calendar days of selling the relinquished property (or by your tax return due date, whichever comes first).
• Qualified Intermediary (QI): You cannot touch the sale proceeds. A QI must hold the funds between the sale and purchase. Using a QI is mandatory — if you receive the funds directly, the exchange is disqualified.

Boot & Partial Exchanges

"Boot" is any non-like-kind property received in the exchange — typically cash or debt relief. If you don't reinvest the full net sale proceeds, the difference is taxable as boot. To fully defer all taxes, you must reinvest at least the net sale proceeds and acquire property with equal or greater debt.

What Qualifies as Like-Kind?

For real estate, "like-kind" is interpreted broadly. Any real property held for investment or business qualifies: apartments, single-family rentals, commercial buildings, raw land, NNN leases, DSTs, and more. The key requirement is that both properties are held for productive use in a trade or business, or for investment — not for personal use or resale (flips generally don't qualify).