Should I 1031 This Property?
A 1031 exchange defers the tax on an investment property sale — it does not erase it. This works out what you would owe if you simply sold, what you would have to buy to defer all of it, and the two dates that decide whether any of it works. It is built for property in New York, New Jersey and Florida, which is where Josh transacts.
One thing that has to happen first
A qualified intermediary must be engaged before the sale closes. If the proceeds touch your bank account — even for a day, even in escrow you control — the exchange is over and the tax is due. Nothing further down this page can undo that, which is why it is at the top rather than in the small print.
The property you are selling
What it is under contract for, or what you expect.
Brokerage, legal and transfer taxes. Six percent of the price is a reasonable placeholder in New York; your own number is better.
Original price plus capital improvements. Not repairs — those were already deducted.
The balance cleared at the closing. This is half of what you have to replace.
If you do not know it, the estimate button uses straight line over 39 years for commercial or 27.5 for residential, on 80% of the price, since land is not depreciable. Depreciation you were entitled to but never claimed still counts against you.
Your tax situation
Used to place the gain in a bracket and to work out whether the 3.8% surtax reaches it.
What you would buy instead
Leave this at the target below to see a full deferral, or lower it to see what a shortfall costs.
New financing on the replacement. Cash you bring instead counts too.
This sets both deadlines. They run from the day you close, not from the day you start looking.
On these numbers
$724,835 deferred.
Selling outright would cost $724,835 in tax on a gain of $2,020,000, and $400,000 of that gain is depreciation you have already deducted, which is taxed at 25% rather than at the capital gain rate. A replacement at the targets below moves all of it forward.
If you simply sell
- Depreciation recapture$100,000
Unrecaptured §1250 gain is taxed at up to 25%, not at the capital gain rate. This is the part of the bill most sell-or-exchange conversations miss, and on a long-held property it is often the biggest line.
- Federal capital gain at 20%$324,000
Long-term rate for a married couple filing jointly with taxable income of about $2,420,000 in the year of sale.
- Net investment income tax$76,760
3.8% on the $2,020,000 of gain sitting above the $250,000 threshold. The threshold has never been indexed for inflation.
- New York State$145,780
New York State and New York City both tax capital gain as ordinary income — there is no preferential rate.
- New York City$78,295
New York State and New York City both tax capital gain as ordinary income — there is no preferential rate.
- Total if you simply sell$724,835
36% of the gain, and 38% of the $1,920,000 you would otherwise walk away with.
What you would have to buy
Buy at least
$2,820,000
Your sale price after selling costs. Buy for less and the difference is taxable, however the money moves.
Carry at least this much debt
$900,000
The mortgage you are paying off. A smaller loan on the replacement is debt relief unless you make it up in cash.
Two ledgers have to balance, and the second is the one people forget: reinvest all the equity, and replace all the debt. Paying off a mortgage and not taking on a new one of at least the same size is debt relief, and debt relief is taxed even though no cash reached you. You can plug that gap with cash instead of a new loan.
The two dates
Identify in writing by day 45
November 9, 2026
Signed, delivered to your intermediary, by midnight. There is no extension for weekends, holidays, a failed deal or a seller who pulls out.
Close on it by day 180
March 24, 2027
Both clocks start the day your sale closes and run at the same time — day 45 is not a separate window before day 180.
How many properties you may name
- Three properties, whatever they are worth — the three-property rule.
- Any number, so long as they add up to no more than 200% of what you sold — the 200-percent rule.
- More than that, and you must actually close on 95% of the value you identified — the 95-percent rule, which is a trap dressed as an option.
Name more than the rules allow and the identification is treated as if you had named nothing at all. It must be in writing, signed, and delivered to your intermediary by midnight on day 45.
Deferred, not forgiven
The gain does not disappear — it moves into the basis of the next property, which is why the figure below is lower than what you paid for it. Sell that property outright one day and the whole deferred gain, including the depreciation recapture, arrives with it. Exchange again and it moves again. Held until death, the basis currently steps up and the deferred gain is wiped out, which is why this is often described as swap till you drop rather than as a saving.
- Basis carried into the replacement$800,000
Not the $2,820,000 you paid for it. The gap is the deferred gain riding along, and it is also the reason your depreciation deductions on the new property are smaller than a fresh buyer's would be.
What this page cannot tell you
- Whether the property qualifies. It must be held for investment or business use. A property held primarily for resale — a flip — does not qualify however the paperwork reads.
- Whether the buyer or seller is a related party. Exchanges with family or entities you control are restricted under §1031(f), and both sides must generally hold for two years afterwards.
- Whether the entity holding the property can exchange. Partnerships, LLCs and co-tenancies each have their own answer, and a partner wanting out of a deal the partnership wants to exchange is its own problem.
- Whether your own numbers are right. Basis and depreciation come off your returns, not off memory — the difference is often six figures.
None of that is a reason not to run the numbers. It is a reason the numbers are the start of a conversation with your CPA, and with Josh, rather than the end of one.
Bring these numbers to someone who has done it
Josh has structured 1031 exchanges for clients across condo apartments, multifamily, industrial and NNN retail, and works with the intermediaries, attorneys and CPAs a deal on a clock needs. The identification window is the part that goes wrong, and it goes wrong because people start looking after they close instead of before.
Rates and deadlines verified August 2026. Federal figures are the 2026 brackets; state figures use the published New York and New Jersey schedules. This is arithmetic on what you entered, not tax advice, and a 1031 is one of the few places where getting the sequence wrong costs more than getting the numbers wrong.
Sources
The numbers are the easy part
Everything on this page is public, computable, and on the page for free. What no calculator has is the part that actually moves a New York number: what a specific board has approved before, why the line above just traded 12% under, which seller will take a February closing. That is the conversation.