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1031 exchange deferred gain

How much gain is deferred if you replace a rental and how much boot is taxed now?

Your numbers

Gain deferred

$331,000

Realized gain$331,000
Boot / cash not reinvested$0.00
Gain recognized now$0.00
Replacement basis reduction$331,000

Tip. Educational estimate with the assumptions listed on this page. Not tax, legal, or investment advice.

Assumptions

  • Both properties are like-kind investment real estate.
  • Boot is the greater of cash kept and equity not rolled into the replacement.
  • Identification and closing deadlines are not modeled.

Explore the numbers

Examples

Load a scenario, then change one input at a time.

Example 1

Full rollover

Replacement is larger and no cash is kept.

Gain deferred

$331,000

Example 2

Cash-out boot

Same sale, $40k kept.

Gain deferred

$291,000

Example 3

Trade down

Replacement is cheaper than net equity.

Gain deferred

$220,000

What this calculates

Estimate realized gain, boot, and deferred gain on a like-kind rental exchange using sale price, basis, and replacement price.

How to use it

  1. Use the actual sale price and a realistic cost of sale.
  2. Enter adjusted basis after depreciation, not original purchase price.
  3. If you keep cash or buy down, put it in boot.

Common mistakes

  • Using original purchase price as basis.
  • Forgetting selling costs, which reduce realized gain.
  • Treating a vacation home as automatically like-kind.

Formula

Realized gain = sale price − selling costs − adjusted basis. Recognized gain = min(realized gain, boot). Deferred = realized − recognized.

FAQ

What is boot?

Value you take out of the exchange: cash, debt relief you do not replace, or a cheaper replacement. Boot can make part of the gain taxable now.

Does deferred gain disappear?

No. It usually reduces basis in the replacement property and shows up later on sale unless you exchange again.

Can I 1031 a short-term rental?

It depends on use, holding, and whether it is investment property. Confirm with a QI and a CPA before you list.

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