Partial 1031 Exchange Calculator
Compare current gain recognition with gain deferred into replacement property. Cash boot and debt relief follow different netting rules.
Book a free consultationEnter the exchange consideration
The starting amounts reproduce an IRS Form 8824 example. Cash received stays boot even when replacement debt is higher.
Sale versus supported exchange
- Taxable sale: gain before character review
- $120,000
- Exchange: realized gain
- $120,000
- Net cash/property/debt boot
- $40,000
- Exchange: gain recognized now
- $40,000
- Exchange: gain deferred
- $80,000
- Replacement property basis
- $170,000
- Debt boot before expense adjustment
- $0
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Educational estimate, updated September 29, 2026. Educational, not individualized tax advice. Eligible gain-producing real-property exchange; timing and intermediary requirements assumed satisfied. Straight-line Section 1250 property and land only; no ordinary recapture, related parties, installment notes, Section 121, or mixed personal use. Expenses must be allowable exchange expenses, not all closing costs. Cash paid excludes those separately entered expenses. No income-tax rate or tax savings is calculated.
Reconcile the exchange before reading the result
This worksheet covers a gain-producing exchange of eligible investment or business real property with straight-line building depreciation and no ordinary recapture. It assumes the legal, timing, and qualified-intermediary requirements are satisfied; it does not determine eligibility or calculate a tax bill.
- STEP 01
Separate values, liabilities, and cash
Use fair market values and adjusted tax basis from the transaction records. Cash paid and cash received are exchange consideration, not the amount routed through a qualified intermediary. List allowable exchange expenses separately; do not include loan costs, prorated rent, reserves, or other items merely because they appear on a closing statement.
- STEP 02
Apply the asymmetric liability rule
Liabilities assumed and cash paid can offset liabilities relieved. Taking on more debt does not by itself offset cash received. The worksheet first reduces gross boot by supported exchange expenses, then adds any unused expenses to the exchange basis calculation. Recognized gain is limited to realized gain in this supported scope.
- STEP 03
Compare recognition and replacement basis
Deferred gain is realized gain less recognized gain; the replacement basis carries that deferred gain forward. This is deferral, not tax elimination. A later disposition can bring the deferred amount back into income. State conformity, installment notes, additional depreciation, Section 1245 property, related parties, and home exclusions require different calculations.
Cash boot despite more replacement debt
An IRS Form 8824 example, simplified to the supported property scope and no expenses.
Swipe horizontally to compare
| Given-up property | Replacement property | Liabilities relieved / assumed | Cash received | Result |
|---|---|---|---|---|
| $220,000; $100,000 basis | $250,000 | $80,000 / $150,000 | $40,000 | $120,000 realized; $40,000 recognized; $80,000 deferred; $170,000 replacement basis |
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Authoritative Sources
Citations reflect U.S. federal tax law as of the article's last reviewed date.
Frequently asked questions
Can replacing debt eliminate cash boot?
No. Additional liabilities assumed can offset debt relief, but do not automatically offset cash received. The distinction is built into the Form 8824 sequence used here.
What does the sale comparison mean?
It shows gain from a taxable sale of the relinquished property at the entered value with the entered expenses. It is a gain comparison, not a full tax or after-tax cash comparison.
What happens to deferred gain?
It reduces replacement property basis. That affects future depreciation and gain; a deferred amount is not a guaranteed permanent saving.
Are cost-segregated properties supported?
Not if Section 1245 property or additional Section 1250 depreciation is involved in the exchange. Those recapture rules can recognize amounts beyond the simplified boot calculation. Select the exception and obtain full transaction analysis.
Are exchange deadlines included?
The tool does not track dates. Deferred exchanges generally have a 45-day identification period and an exchange period ending at the earlier of 180 days or the applicable return due date including extensions. Timing and qualified-intermediary compliance need separate confirmation.
Why does an unbalanced exchange stop?
Missing consideration or a misclassified closing entry can change boot and basis. Correct the values, cash, and liability entries before relying on a gain illustration.
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A property sale or exchange approaching?
Review ownership, basis, debt, deadlines, and the return work before the closing documents are final.
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