Equal-or-greater value and equal-or-greater equity, both
To defer the full gain, the replacement property needs to cost at least as much as your net sale proceeds, and you need to reinvest all the equity you pulled out — falling short on either one creates boot equal to the gap. Planning the numbers on the replacement property itself? See the Rental Property Investment Analyzer.
Frequently asked questions
What is "boot"?
Any value you pull out of the exchange instead of reinvesting — cash you keep, or debt relief that isn't offset by taking on new debt or adding cash. Boot is taxable now, even though the rest of the gain is deferred.
Why does the replacement property need to be equal or greater value?
Buying a cheaper replacement property than what you sold effectively pulls equity out of the deal, which is exactly what boot rules are designed to catch — the shortfall becomes taxable the same way excess cash would.
What is the deadline for a 1031 exchange?
You must identify replacement property within 45 days of selling the relinquished property, and close on it within 180 days — both run from the same sale date, not from each other, and neither is modeled here since this tool covers the financial mechanics only.
Last updated: June 2026