Calculation of tax savings from 1031 exchange

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Calculation of tax savings from 1031 exchange

Stacy Tring
Member since 2024 · 24 posts · 6 votes

Hi everyone, 

Do my calculations look correct on the potential tax savings I would realize ($116,238.98!) if I did a 1031 exchange? Thanks in advance.

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Steve WoltermanBusiness Member
Attorney / Qualified Intermediary · Cincinnati, OH · Member since 2022 · 49 posts · 26 votes
1y

Hi Stacy, looking at your numbers, I come up with the following:

Dep Recap is 25% on 56,631.30 = 14,157.83

Fed Cap Gain is 20% on the remainder of the gain, 20% on 126,739.90 = 25,347.97

State Gain is 7.25% on 183,371.20 = 13,294.41

NIIT is 3.8% on 183,371.20 = 6,968.111

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  • Steve WoltermanBusiness Member
    Attorney / Qualified Intermediary · Cincinnati, OH · Member since 2022 · 49 posts · 26 votes
    1y

    Hi Stacy, looking at your numbers, I come up with the following:

    Dep Recap is 25% on 56,631.30 = 14,157.83

    Fed Cap Gain is 20% on the remainder of the gain, 20% on 126,739.90 = 25,347.97

    State Gain is 7.25% on 183,371.20 = 13,294.41

    NIIT is 3.8% on 183,371.20 = 6,968.111

    1031 Federal Exchange
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    • Stacy Tring
      OP
      Member since 2024 · 24 posts · 6 votes
      1y

      Thanks for pointing out my mistake!

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  • Jon Taylor
    Pasadena, CA · Member since 2019 · 136 posts · 148 votes
    1y

    No. Your depreciation recapture is only a 5% premium to your federal rate (15 or 20%) on what has been depreciated. 

    If you’d like, I have an excel model I can share with you if you submit your info.

    https://forms.gle/6cFJiuvCWstMnESZ9

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  • Dave FosterBusiness Member
    Qualified Intermediary for 1031 Exchanges · St. Petersburg, FL · Member since 2013 · 9k+ posts · 9k+ votes
    1y

    @Stacy Tring, Kudos to you for those calculations.  You did some good spread sheet work.  But you're double dippin your tax in several cases.  It's not as bad as you think.  We have a calculator on our website that can help you compare the 1031 vs no 1031 options.  @Jon Taylor, is also awesome at walking you through the calcs.

    The 1031 Investor5137 Reviews
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