Exit Adviser · Tax Deferral Analysis
1031 Exchange
Analysis Report
Analysis Report
Full Deferral
No boot is received, so the full gain is deferred. Note that zero boot does not require all three reinvestment targets to be met: exchange expenses reduce the amount you must reinvest, and cash you add offsets debt relief, so a target can show a shortfall above and the gain still be fully deferred.
Tax deferred today$174,620
Section A — Exchange Waterfall
1
Gross sale price
Before closing costs or mortgage payoff
$1.50M
2
Less: closing costs
5% of sale price
−$75K
3
Less: mortgage payoff
Existing lien retired at closing
−$400K
4
Net equity / exchange amount
Funds delivered to qualified intermediary
$1.03M
5
Replacement property acquired
$2.00M replacement · $800K new mortgage
$2.00M
6
Gain deferred (not taxed today)
$865K realized gain · $174,620 in tax deferred
$865K
Section B — IRS Exchange Deadlines
Both the 45-day and 180-day clocks start on this date, not on the identification date. The 180-day deadline is the earlier of 180 days or your tax return due date including extensions.
Close
Day 45
Day 90
Day 135
Day 180
45-day identification deadline
Dec 11, 2026
Identify replacement property in writing to your qualified intermediary — up to 3 properties of any value, any number whose combined value is within 200% of your sale price, or more than either if you actually receive at least 95% of the value you identify. Missing this date disqualifies the exchange.
180-day closing deadline
Apr 25, 2027
The 180-day clock starts the day you close the relinquished property — not the identification date. Your deadline is the earlier of this date and your tax return due date including extensions. Without an extension that return is due Apr 15, 2027, which comes first.
Section C — Reinvestment Targets & Deadlines
Target 1 — Equal or greater value
Replacement property must be ≥ the net sale price — the sale price less exchange expenses, which reduce what you have to reinvest. Yours: $2.00M ≥ $1.43M.
Pass
Target 2 — Equal or greater equity reinvested
Net equity in replacement ($1.20M) must be ≥ net proceeds from sale ($1.03M).
Pass
Target 3 — Equal or greater debt assumed
New mortgage ($800K) must be ≥ old mortgage paid off ($400K).
Pass
IRS Deadline — 45-day identification
You must identify replacement property in writing within 45 days of the relinquished closing — up to 3 properties of any value, any number whose combined value is within 200% of your sale price, or more than either of those if you actually receive at least 95% of the total value you identify. Deadline: Dec 11, 2026 — 45 days from today.
45 days left
IRS Deadline — 180-day close
You must close on the replacement property within 180 days of the relinquished closing — or by your tax return due date including extensions, whichever is EARLIER. Day 180 is Apr 25, 2027 (180 days from today). But your 2026 return is due Apr 15, 2027, so that is your deadline unless you file an extension — which moves it to October 15 and gives you the full 180 days.
170 days left
Section D — Tax Calculation
Total realized gain$865,000
Depreciation recapture (taxed at 25% + 3.8% NIIT)$120,000
Long-term capital gain$745,000
Tax on depreciation recapture$34,560
Tax on cap gain (15% + 3.8% NIIT)$140,060
Total tax due without exchange$174,620
Tax on boot received (if any)None
Tax deferred via 1031 exchange$174,620
Gain/(loss) deferred (carried forward)$865,000
Replacement property basis$1,135,000
Section E — Compounding Benefit of Deferral
Tax deferred today
$174,620
Working capital stays in your investment
10-yr equity with exchange
$2.46M
5%/yr on $2.00M, less the $800K mortgage
10-yr equity without
$1.67M
5%/yr on after-tax proceeds plus the $175K you would not have had to add
Compounding advantage
$788K
$284,438 from deferral + $503,116 from leverage (debt modeled interest-free, and the sale path is assumed not to re-borrow)
Replacement monthly payment
$5,322/mo
$800K at 7% / 30 yr
New equity at closing
$1.20M
$2.00M − $800K new mortgage
10-year net equity — with vs. without exchange
With 1031
Without (taxed)
Section F — NOI & Debt Service Coverage Analysis
Relinquished property (current)
Income & ExpensesAnnual ($)% of EGI
Gross scheduled income$120,000—
Vacancy & credit loss (5%)($6,000)5.3%
Effective gross income (EGI)$114,000100%
Property tax($14,000)12.3%
Insurance($4,200)3.7%
Property management($9,600)8.4%
Maintenance & repairs($5,000)4.4%
Utilities (common area)($1,800)1.6%
Other expenses($2,000)1.8%
Net Operating Income (NOI)$77,40067.9%
Cap rate5.16%
Gross rent multiplier12.5×
Replacement property (pro forma)
Income & ExpensesAnnual ($)% of EGI
Gross scheduled income$180,000—
Vacancy & credit loss (5%)($9,000)5.3%
Effective gross income (EGI)$171,000100%
Property tax($22,000)12.9%
Insurance($6,500)3.8%
Property management($14,400)8.4%
Maintenance & repairs($7,500)4.4%
Utilities (common area)($2,400)1.4%
Other expenses($3,000)1.8%
Net Operating Income (NOI)$115,20067.4%
Cap rate5.76%
Gross rent multiplier11.1×
Annual debt service$63,869
DSCR1.80×
Replacement Property — Debt Service Coverage Ratio (DSCR)1.80×
0×0.5×1.0×1.25× min1.5×2.0×+
✓ Strong — replacement property NOI covers debt service 1.80×, exceeding the standard 1.25× lender requirement.Replacement NOI
$115,200
Annual debt service
$63,869
DSCR
1.80×
Relinquished NOI
$77,400
NOI improvement
$37,800
Cap rate (replacement)
5.76%
For illustration only. Consult a CPA and qualified intermediary before executing a 1031 exchange. · October 27, 2026