1031 Exchange Calculator Tool

Relinquished Property

Input figures based on the relinquished property sale as of the closing date.

Sale price iGross sale price of the relinquished property.

Mortgage amount iAmount of debt paid off at closing.

Depreciation iTotal depreciation deductions claimed since acquisition. Used to determine depreciation-recapture portion of any gain that must be recognized.

Adjusted basis iOriginal cost plus improvements added to property, minus depreciation. Used to compute gain on sale (gain = sale price minus adjusted basis).

Relinquished property was held for the requisite long-term capital gain period iGenerally, more than one year. Used to determine tax rate on any taxable gain (beyond depreciation recapture).

Replacement Property

Input figures based on a theoretical/anticipated future transaction.

Purchase price iPurchase price of replacement property.

Mortgage amount iAmount of debt on replacement property.

Taxpayer Information

California

Taxpayer’s marginal income tax rate iRate of taxpayer's top marginal income tax bracket. (Note: California taxes capital gain and depreciation recapture at ordinary income tax rates.)

Federal

Depreciation recapture tax rate (ignoring NIIT) iFederal rate applied to the depreciation-recapture, taxed at lesser of taxpayer's Federal ordinary income tax rate and 25%.

Taxpayer subject to Net Investment Income Tax (NIIT) iCheck if 3.8% NIIT applies (applicable to net investment income of personal taxpayers with adjusted gross income above $200,000 (individual) or $250,000 (married filing jointly)).

Assumptions

This tool assumes the following for all calculations:

Relinquished property was held for business or investment use.
Relinquished property is located in California.
Replacement property will be held for business or investment use.
All 1031 exchange requirements are met. See here.
California is taxpayer's state of residence for income tax purposes.

IMPORTANT NOTE: This tool produces a simplified, illustrative estimate for discussion purposes only. It is not legal or tax advice, and it does not account for selling costs, exchange fees, prior suspended losses, alternative minimum tax, or every nuance of your specific transaction. Consult a qualified tax advisor or attorney before relying on these figures.