1031 DST Replacement Calculator

A 1031 exchange defers your capital gains tax only if what you buy is at least equal to what you sold. There are three separate things to match, and it is possible to satisfy one while failing another. This calculator checks all three at once and shows the amount still outstanding on each.

In the top row, fill the two yellow boxes: the Equity that came out of the sale and went to your qualified intermediary, and the Debt — the mortgage that was paid off. The calculator adds them into RE Value, which is the value of the property you sold. That figure is the total your replacement portfolio has to match.

Use one line per DST. There are five lines to start. The small + DST button under the table adds one more line each time you press it, up to two extra.

You enter four things on each line and the calculator works out the rest:

• Forecast Return % — the annual return the DST forecasts.
• Property — the name, for your own reference.
• Equity — how much of your money goes into this one.
• LTV — the debt the DST already carries, as a percentage of the property's value.

LTV is the piece that does the heavy lifting. Put $1,000,000 into a DST at 50% LTV and you have acquired $2,000,000 of real estate, because the DST's own debt supplies the other half. That is how $1,000,000 of equity can acquire $2,000,000 of replacement value, and it is why the debt column fills itself in. Type into the yellow boxes only. Every white and light gray figure is calculated for you.

Split $ evenly puts an even share of the equity into each DST, and you adjust from there. Click a $ to lock an amount you want to keep. Undo and Redo step through every change, including the LTV you try in the green box, and Reset empties the worksheet. To clear one line, point at its DST name and click the ×; click ↺ to bring it back. Your entries and their Undo and Redo history are kept only in this browser, so they stay when you refresh or come back later.

When the debt does not match, the box under the buttons shows what would match it. If the debt is over, it shows the amounts that would match with a Cash DST (0% LTV) added, or with more in a 0% LTV line you already have. If it is under, it shows the LTV that would give an even split; enter the LTV of a DST you are considering. The amounts keep your DSTs as close to even as a match allows. Nothing changes until you press Apply, and Undo takes it back. It is shown for comparison only, not a recommendation.

Yes. In any yellow amount box you can type a sum. The totals update as you type, and the box shows the result when you move to the next box. For example, 200,002 − 2 becomes 200,000.00, and 150k + 500 becomes 150,500.00 (k means thousand, m means million). This makes it easy to move a few dollars from one DST to another: subtract them in one box and add them in the other. If a box shows a red outline, it could not read what you typed; correct the entry and the outline goes away.

Yes. Once the 1031 DST Replacement Finder shows its results, click ↗ on any combination. This calculator opens in a new tab with that combination’s data filled in.

Underneath the property lines, outside the main table, three summary rows do the checking. Sub-Total adds up what you are buying. Remaining to Replace below it is the row to read: it shows what still has to happen, in three separate columns.

• Equity — the full amount that came out of the sale has to go back into real estate. Anything left over is generally treated as boot and is taxable.
• Debt — the mortgage you paid off has to be replaced, either by taking on debt through the DSTs or by adding cash of your own. Cash beyond what is needed to cover the debt is not part of the 1031.
• RE Value — the total value you buy has to reach the total value you sold.

A zero in a column means that test is satisfied and nothing more is needed there. A figure marked under is the amount still to be replaced. A figure marked over is more than was sold, which meets that test.

Underneath the table a short summary gives the overall verdict on the figures you entered. It reads Fully replaced, in green, when all three tests are met, or Partial exchange, taxable boot likely, in red, when any one of them is not. Below the verdict is a line for each of the three tests explaining where it stands.

The upper gray box under the Forecast Return % column is the blended forecast: the forecasts you entered, weighted by the equity placed in each DST. It is a weighted average, not a simple one, so a DST with more equity behind it counts for more.

Hypothetical example: say you have $2,500,000 to place and two DSTs whose sponsors forecast 4.10% and 4.50%. A simple average of those two forecasts is 4.30%, no matter how you split the money. The blended forecast moves with the split:

The simple average reads 4.30% in all three rows, because it only looks at the two forecast percentages and ignores how much money is behind each. It matches the blended figure only in the first row, where the split is even.

The blended figure follows the money. The equity is the same $2,500,000 in each row, and only the split changes, but as more of it moves into the 4.10% DST the blend moves toward 4.10%. That is what this figure is there to show, as you decide how to split equity between DSTs.

Two things move the blended forecast: the forecast percentages you enter, and how you split the equity between them. Debt does not move it. Change an LTV from 0% to 55% and the blended forecast does not change at all. A cash-on-cash forecast is measured on the cash you put in, and the sponsor's forecast already accounts for whatever debt that DST carries. LTV changes how much real estate your equity buys; it does not change the forecast on that equity.

The figures above are hypothetical and show the math only. Forecasts are the sponsor's estimates, are not guaranteed, and may change.

A second box appears below the first, in the same Forecast Return % column, but only when some of your exchange equity has not been placed.

The first is based on the equity you actually placed. The second is based on the full amount you needed to place. Each box prints the dollar figure it was calculated on, so you can tell them apart.

In a full exchange the two are identical, so only one is shown. When they differ, the second shows the same forecast spread over all the equity you needed to place.

An investor sells for $4,000,000: $2,500,000 of equity to the intermediary and a $1,500,000 mortgage paid off. He puts $1,000,000 into a single DST at 50% LTV forecasting 4%.

That $1,000,000 buys $2,000,000 of real estate and carries $1,000,000 of debt. Against what he sold, he is $1,500,000 short on equity, $500,000 short on debt and $2,000,000 short on value. All three tests fail.

The first box reads 4%, on the $1,000,000 he placed. The second reads 1.6%: the same forecast spread over the $2,500,000 he needed to place, because $1,500,000 was not placed. Hypothetical example; forecasts are not guaranteed.