Property Sale Calculator

Three figures you already know: what you bought the property for, the equity you put in (your down payment) and what it is selling for. From those the calculator works out the original loan, the loan-to-value you bought at, the equity you have to reinvest, the debt you have to replace and the loan-to-value your replacement property needs.

If the loan has been paid down, add the loan balance at sale; leave it blank if it has not. Depreciation taken is optional. Add it to see the gain and the estimated tax if you cash out instead of exchanging.

Bought for and Equity you put in are on the closing statement from when you bought the property: the purchase price and your down payment. Selling for is the contract sale price, before costs.

Loan balance at sale is the payoff on your closing statement, or the balance on your latest mortgage statement. Depreciation taken is on the depreciation schedule of your tax returns; your CPA has the total, including any carried over from an earlier exchange.

No. The match is to the sale, not the purchase. To defer all of the tax, reinvest all the equity that comes out of the sale and replace the debt that is paid off at the sale, so the replacement property is worth at least what you sold for. The loan-to-value you bought at no longer matters.

Because a mortgage is paid down over time. The debt you have to replace is what is actually paid off at the sale, not the loan you started with. A $300,000 loan that has been paid down to $240,000 means $240,000 of debt to replace, and $60,000 more equity coming out of the sale. The gain does not change: it is the sale price less your adjusted basis, whatever the loan balance.

Cash you keep is taxable boot, and it changes the other numbers: less equity to reinvest, and a higher loan-to-value needed to replace the same debt. The Boot Calculator handles that, and lets you enter the replacement property you are actually buying to see whether it replaces the debt.

Depreciation recapture is 25% on the depreciation you have taken. Federal capital gains is 15% or 20% depending on your taxable income; the calculator starts at 20%, change it to 15% if that is your bracket. Add your state rate if your state taxes capital gains, and uncheck the 3.8% net investment income tax if your income is below $200,000 (single) or $250,000 (married filing jointly). Confirm your rates with your CPA.

An owner bought a property for $400,000 with $100,000 down, so the loan was $300,000 and the loan-to-value was 75%. The property is selling for $650,000 and the loan has been paid down to $240,000. The $240,000 is paid off, $410,000 goes to the qualified intermediary, and the replacement property needs a loan-to-value of about 36.9% to replace the $240,000 of debt.

With $90,000 of depreciation taken, the gain if they cash out is $340,000: $650,000 less an adjusted basis of $310,000. Estimated tax at 25% on the $90,000 of depreciation, 20% on the remaining $250,000 and 3.8% on the whole gain is about $85,420, before state tax.