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US
Taxes
1031 Exchange Tax Calculator

2026 1031 Exchange & Capital Gains Tax Calculator - Deferred Tax Calculator

Use our deferred tax calculator to compare 2026 capital gains tax real estate liability vs. Section 1031 deferral, including depreciation recapture and NIIT assumptions.

Calculator Inputs

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Applied state rate: 13.30% (CA)

Estimated Deferred Tax Today

$186,820
Difference between estimated immediate tax in taxable sale vs. 1031 deferral scenario

Adjusted Basis

$635,000

Original basis + improvements - depreciation

Net Sales Proceeds

$1,175,000

Sales price after selling expenses

Realized Gain

$540,000

Net proceeds - adjusted basis

Depreciation Recapture Base

$140,000

Portion potentially taxed at 25%

Depreciation Recapture Tax (25%)

$35,000

Federal Capital Gains Tax

$80,000

NIIT + State Tax

$71,820

Taxable Sale (Estimated Tax Now)

$186,820

1031 Exchange (Estimated Tax Now)

$0

Reinvestable Capital (Taxable Sale)

$988,180

Reinvestable Capital (1031)

$1,175,000

The Strict 2026 Deadlines

⏰ 45 Days: Identify replacement properties in writing

⏰ 180 Days: Close on replacement property

🚫 No Extensions: IRS does not grant extensions

🏦 Qualified Intermediary: Money must be held by QI, not your account

Calculator inputs stay on your device (local processing).

Disclaimer: All calculators on this website are provided for informational and illustrative purposes only. The results do not constitute professional advice (including legal, tax, financial, medical, or other advice). Despite careful programming, we assume no liability for the accuracy, completeness, or timeliness of the results. For matters requiring professional advice, we recommend consulting an appropriate specialist (e.g., a tax advisor, lawyer, accountant, or physician).

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How the 2026 Math Works

Adjusted Basis = Purchase Price (Original Basis) + Capital Improvements − Depreciation Taken. Realized Gain = (Sales Price − Selling Expenses) − Adjusted Basis. We then split gain into depreciation recapture (up to depreciation taken, taxed at 25%) and remaining long-term gain (15% or 20%), plus optional 3.8% NIIT and state tax assumptions.
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2026 Formula Framework

Adjusted Basis = Purchase Price + Improvements − Depreciation. Realized Gain = (Sales Price − Selling Expenses) − Adjusted Basis. We estimate tax now by layering depreciation recapture (25%), long-term capital gains (15%/20%), state tax, and optional NIIT.

Deferred tax shown in this calculator is the estimated immediate tax avoided in a compliant 1031 exchange structure.

Key Terms

Adjusted Basis

Purchase Price + Capital Improvements - Depreciation Taken

Realized Gain

Net Sales Proceeds - Adjusted Basis

Depreciation Recapture

Gain tied to prior depreciation, estimated at 25% federal rate

NIIT

Net Investment Income Tax of 3.8% for applicable high-income cases

Qualified Intermediary

Independent party required to hold proceeds in delayed 1031 exchanges

2026 1031 Exchange & Capital Gains Tax Calculator

See the tax impact in seconds: pay now (capital gains + depreciation recapture + NIIT) vs. defer through Section 1031. This deferred tax calculator is built for US real estate investors who want fast numbers before they list or close.

Calculator Inputs (What You Enter)

For a clean estimate, enter these fields exactly as they appear in the calculator:

  • Purchase Price (Original Basis)
  • Capital Improvements
  • Depreciation Taken
  • Sales Price
  • Selling Expenses (broker commissions, legal, closing-related selling costs)
  • State Income Tax Rate
  • Federal Tax Bracket (15% or 20%)

How We Calculate Adjusted Basis and Realized Gain

The model follows the common CPA workflow for investment property sales:

  • Adjusted Basis: Original Basis + Improvements − Depreciation Taken
  • Net Sales Proceeds: Sales Price − Selling Expenses
  • Realized Gain: Net Sales Proceeds − Adjusted Basis

We then estimate total tax exposure from three major layers:

  • Depreciation Recapture: taxed at 25%
  • Long-term Capital Gain: taxed at your selected 15% or 20%
  • NIIT: optional 3.8% for high-income scenarios

1031 Exchange vs. Taxable Sale (Why This Matters)

The calculator shows two outcomes side by side:

  • Taxable sale: you pay estimated federal, recapture, NIIT (if applicable), and state tax now.
  • 1031 path: immediate tax is assumed deferred (subject to full compliance).

This gives you a quick estimate of how much additional capital you can keep working in your next asset when using a properly structured exchange.

The Strict 2026 Deadlines

1031 timing is not flexible. Missing either deadline can invalidate deferral.

  • 45-Day Identification Period: identify replacement property in writing.
  • 180-Day Closing Period: complete acquisition within 180 days.

This calculator estimates capital and tax exposure. Deadline management remains the investor's responsibility with legal/tax advisors and a Qualified Intermediary.

Real-World Notes for Investors and Sponsors

In high-value deals, the depreciation recapture piece is often underestimated. We model it explicitly because it can materially change projected proceeds.

For syndicators and brokers, this type of transparent modeling improves trust and conversion quality, especially when comparing hold/sell/exchange paths with clients who need clear numbers fast.

1031 Exchange FAQ

Q:What disqualifies a property from a 1031 exchange?

Primary residences and flip inventory generally do not qualify. Section 1031 is for investment or business-use real property held with qualifying intent, not dealer inventory or personal-use homes.

Q:Does a 1031 exchange eliminate capital gains tax?

No. A 1031 exchange defers tax; it does not erase it. Taxes are generally recognized later if you sell without another qualifying exchange or generate taxable boot.

Q:Can I use the proceeds to pay off debt?

Be careful. Paying off debt can create mortgage boot, which may become taxable. If exchange value or debt is not fully replaced, immediate tax can apply.

Q:Do I need a Qualified Intermediary (QI)?

Yes. A Qualified Intermediary is generally required in standard delayed exchanges. If you receive or control sale proceeds directly, deferral treatment can be lost.
Mark Sterling
Real Estate Tax Analyst

Reviewed by Mark Sterling, Real Estate Tax Analyst. Mark reviewed this 2026 Section 1031 calculator framework against IRS technical guidance on like-kind exchanges, depreciation recapture treatment, and NIIT assumptions. This tool is an educational estimate, not legal, tax, or investment advice.

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