top of page
TAX CALCULATOR
ESTIMATING THE 1031 TAX DEFERRAL ON THE SALE OF INVESTMENT
An Exchanger should always consult with competent independent legal and/or tax advisors to determine the applicability of any IRC 1031 tax deferred exchange benefits. The gain, not the profit or equity, from the transfer of investment property is subject to the combination of federal and state capital gain taxes and federal taxes on the gain due to the depreciation taken on the property. Remember, it is possible to have little or no equity in the investment property being transferred and still owe taxes!
1.) First, Calculate the Adjusted Basis:
Original Purchase Price
Non-expensed Improvements
​
Depreciation Taken
Adjusted Basis
​
+
=
-
=
$_____________
$_____________
$_____________
$_____________
$_____________
2.) Second, Use the Adjusted Basis to Determine the Capital Gain Tax:
Sales Price
Adjusted Basis
Adjusted Sales Price
Transaction Costs
Total Gain on Sale
State Capital Gain Tax Rate
State Capital Gain Tax
Gain Due to Appreciation
Federal Capital Gain Tax Rate on
Gain Due to Appreciation
Tax on Gain Due to Appreciation
Gain Due to Depreciation Taken
Federal 25% Tax Rate on
Gain Due to Depreciation Taken
Tax on Depreciation Taken
​
-
=
-
=
x
=
=
​
x
=
=
​
x
=
$_____________
$_____________
$_____________
$_____________
$_____________
$_____________ %
$_____________ (A)
$_____________
$_____________ %
$_____________ (B)
$_____________
​
25%
$_____________ (C)
TOTAL OF TAXES (A) + (B) + (C)
equals the approximate amount of tax that is deferred by doing an IRC 1031 tax deferred exchange.
=
$_____________
NOTE: Neither the federal deduction for state taxes nor the additional 3.8% tax on net investment income is included in this calculation.
This 1031 tax calculator is provided for illustration purposes only. It is not intended to be tax or legal advice, does not constitute individual investment advice, and does not indicate suitability for all. Individual results will vary. Please consult the appropriate professional regarding your individual circumstance.
bottom of page