What Is a Delaware Statutory Trust (DST) and How Does It Benefit 1031 Exchange Investors?
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1031 Exchange Calculator
Use this 1031 exchange calculator to see how much you could save through a 1031 exchange versus paying taxes on your property sale.
This 1031 Exchange Calculator is intended for informational purposes only and should not be considered tax advice. We do not offer tax-related suggestions or guidance. We recommend consulting with a qualified tax professional for personalized advice and to understand the specific implications related to your individual tax situation. The results provided by this calculator are estimates and should be used as a guide only.
* The NII tax calculation presented is an estimate and may not reflect your actual tax liability. Consult your tax advisor for an accurate assessment, and visit the IRS page on Net Investment Income Tax for more details.
Glossary of Terms
PROPERTY & SALE INPUTS
Original Purchase Price
INPUT
The price originally paid to acquire the property, excluding financing costs and closing adjustments. This is the starting point for calculating your cost basis.
Capital Improvements
INPUT
The total cost of improvements made to the property that add value, prolong its useful life, or adapt it to new uses. Routine repairs and maintenance are not capital improvements. Examples include a new roof, structural additions, or major system replacements.
Accumulated Depreciation
INPUT
The total depreciation deductions taken against the property during ownership. Depreciation reduces taxable income each year while the property is held, but it is subject to recapture when the property is sold.
Sales Price
INPUT
The gross price at which the property is sold, before any selling costs or debt payoff.
Selling Expenses
INPUT
Costs directly related to the sale, such as broker commissions, title fees, transfer taxes, and closing costs paid by the seller.
Loan Balances at Sale
INPUT
The remaining principal on any mortgage or debt secured by the property at the time of sale. This amount is paid off from the sale proceeds and is subtracted when calculating what the investor actually receives.
TAX RATE ELECTIONS
State Tax Rate
INPUT
The state-level tax rate that applies to the gain from the sale. The calculator uses the top marginal rate for the selected state; some states do not tax capital gains.
Capital Gains Tax Rate
INPUT
The federal long-term capital gains rate applied to the gain. Most investors selling investment property qualify for either the 15% or 20% rate, depending on total taxable income.
Net Investment Income Tax (NIIT) Rate
INPUT
An additional 3.8% federal tax that applies to net investment income above certain income thresholds. Investors below those thresholds should select 0%.
Depreciation Recapture Rate
INPUT
The federal tax rate applied to previously deducted depreciation when the property is sold. For most real estate, this rate is fixed at 25%.
FIGURES THE CALCULATOR DERIVES
Sales Proceeds
CALCULATED
The net amount received from the sale after selling expenses, but before any taxes or debt payoff.
Cost Basis
CALCULATED
The original investment in the property for tax purposes: the purchase price plus any capital improvements made during ownership.
Adjusted Cost Basis
CALCULATED
The cost basis reduced by accumulated depreciation. This is the figure used to measure the true economic gain on the property.
Capital Gain
CALCULATED
The gain used to calculate federal capital gains tax. It reflects the sale proceeds compared to the original cost basis before adjusting for depreciation.
Adjusted Capital Gain
CALCULATED
The gain used to calculate state tax and Net Investment Income Tax (NIIT). It reflects the full economic gain, including the portion attributable to depreciation taken during ownership.
Understanding the Results
The results panel shows the same six figures for two scenarios: paying taxes on an outright sale, or deferring them through a 1031 exchange. In the 1031 column, all four tax lines appear as $0 because the exchange defers, rather than eliminates, those liabilities.
Capital Gains Tax
Federal, on realized gain
The federal tax owed on the portion of the sale that qualifies as long-term capital gain. This is one of the largest tax lines for most investors and is fully deferred in a 1031 exchange.
Depreciation Recapture Tax
Federal, flat 25%
The federal tax owed on depreciation deductions taken during ownership. Even when a property has appreciated modestly, this line can be significant for investors who have held the asset for many years.
State Taxes
Varies by state
State-level tax on the gain from the sale. This amount can vary substantially depending on where the property is located; a small number of states impose no capital gains tax at all.
Net Investment Income Tax (NIIT)
Federal, 3.8%
An additional federal tax on investment income for higher-income taxpayers. It applies on top of the capital gains rate for investors above the applicable income thresholds.
Total Tax Paid
Sum of the four lines above
The combined federal and state tax obligation on a taxable sale. This is the figure displayed as Estimated Tax Savings at the top of the calculator, because it represents the amount an investor would defer by completing a 1031 exchange instead of selling outright.
After-Tax Proceeds
Cash available to the investor
The amount left after selling expenses, loan payoff, and taxes. In the 1031 scenario, these proceeds are held by a qualified intermediary and reinvested into the replacement property rather than distributed to the investor.
HOW TO READ THE COMPARISON
The difference between the two After-Tax Proceeds figures represents the additional capital an investor keeps working in real estate by choosing a 1031 exchange. That capital continues to compound in the replacement property, which is why many long-term investors treat 1031 exchanges as a core wealth-preservation tool.
How This Calculator Works
STEP 1 – INTERMEDIATE FIGURES
Sales Proceeds
Sales Price − Selling Expenses
Cost Basis
Original Purchase Price + Capital Improvements
Adjusted Cost Basis
Cost Basis − Accumulated Depreciation
Capital Gain
Sales Proceeds − Cost Basis
Adjusted Capital Gain
Sales Proceeds − Adjusted Cost Basis
STEP 2 – TAX CALCULATIONS
Capital Gains Tax
Capital Gain × Capital Gains Tax Rate
Depreciation Recapture Tax
Accumulated Depreciation × Depreciation Recapture Rate
State Taxes
Adjusted Capital Gain × State Tax Rate
Net Investment Income Tax (NIIT)
Adjusted Capital Gain × NIIT Rate
STEP 3 – TOTALS AND NET PROCEEDS
Total Tax Paid
Capital Gains Tax + Depreciation Recapture Tax + State Taxes + Net Investment Income Tax (NIIT)
After-Tax Proceeds
Sales Price − Selling Expenses − Loan Balances at Sale − Total Tax Paid
Considering a 1031 exchange?
Origin Exchange offers institutional-quality multifamily DST properties designed for accredited 1031 investors seeking passive, tax-deferred ownership. Explore current Origin Exchange offerings and available DST properties.
