Debt Replacement Calculator

To receive full tax deferral using a 1031 exchange, a rule of thumb is the (“Exchangor” or “Taxpayer”) Person intending to conduct a 1031 tax deferred exchange, who transfers a relinquished property and thereafter receives a replacement property. Exchanger must “trade up or even in value”. This means that all the net equity of the sale needs to be reinvested and new debt needs to be in place in an amount at least equal to any debt paid off upon sale of the Relinquished Property. Alternatively, the debt match requirement can be offset by adding fresh cash in that amount.

Matching debt and equity are relatively simple when looking at a traditional Replacement Property such as a single family rental or other similar investment property. However, meeting this requirement is not always as straightforward when an Exchanger is looking to reinvest Exchange Funds into a passive real estate investment such as a A Delaware Statutory Trust is a real estate investment vehicle that provides investors with access to investment grade real estate that is generally larger than they could have acquired on their own. The Taxpayer acquires a fractional interest (see below) in the property. Use of DSTs in 1031 exchanges was approved by the IRS in Revenue Procedure 2004-86. Delaware Statutory Trust (DST) , Tenants-In-Common (TIC), or ultimately into a Real Estate Investment Trust (REIT). These latter types of investments may come with no debt or debt with very different leverage (debt) percentages associated with an individual investment.

The below calculator is intended to help calculate the overall debt replacement required for full tax deferral when looking to reinvest into a type of passive real estate investment referred to above.

Relinquished Property
Sale Price of Exchange Property	$
Loan Payoff Amount	$
Proceeds received by the taxpayer from the transfer of the relinquished property pursuant to the relinquished property contract. Exchange Funds to Qualified Intermediary	$
Loan to Value of Sold Property	%

Reinvestment Requirement for full deferral with 1031 Exchange	$

Replacement Property(s)

Property #1
Proceeds received by the taxpayer from the transfer of the relinquished property pursuant to the relinquished property contract. Exchange Funds Invested	$
Leverage % (Loan to Value)	%
Loan Value Assumed by (“Exchangor” or “Taxpayer”) Person intending to conduct a 1031 tax deferred exchange, who transfers a relinquished property and thereafter receives a replacement property. Exchanger	$
Total Toward Replacement Requirement	$

Property #2
Proceeds received by the taxpayer from the transfer of the relinquished property pursuant to the relinquished property contract. Exchange Funds Invested	$
Leverage % (Loan to Value)	%
Loan Value Assumed by (“Exchangor” or “Taxpayer”) Person intending to conduct a 1031 tax deferred exchange, who transfers a relinquished property and thereafter receives a replacement property. Exchanger	$
Total Toward Replacement Requirement	$

Property #3
Proceeds received by the taxpayer from the transfer of the relinquished property pursuant to the relinquished property contract. Exchange Funds Invested	$
Leverage % (Loan to Value)	%
Loan Value Assumed by (“Exchangor” or “Taxpayer”) Person intending to conduct a 1031 tax deferred exchange, who transfers a relinquished property and thereafter receives a replacement property. Exchanger	$
Total Toward Replacement Requirement	$

Total Exchange Value of Those certain items of real and/or personal property qualifying as “replacement property” within the meaning of Treasury Regulations Section 1.1031(k)‑1(a) and either: (a) received by the taxpayer within the designation period in accordance with Treasury Regulations Section 1.1031(k)‑1(c)(1) or (b) identified in a written designation notice signed by the taxpayer and hand delivered, mailed, telecopied or otherwise sent to the qualified intermediary before the end of the designation period in accordance with Treasury Regulations Sections 1.1031(k)‑1(b) and (c). The definition of “replacement property” shall not include property the identification of which has been revoked by the taxpayer in accordance with Treasury Regulations Section 1.1031(k)‑1(c)(6); (“New Asset”) Property or properties properly received by a taxpayer as part of a 1031 exchange. Replacement Property	$
Total Debt Replacement	$
Total Equity Replacement	$

Potential Amount Subject to Tax

If the figure above is greater than $0, taxable boot will occur on that amount. To avoid boot the investor can rebalance to higher leveraged interests, offset with another higher leveraged real property interest or bring in fresh equity to meet the full reinvestment requirement.

THIS CALCULATOR PROVIDES AN ESTIMATE. Please consult with your tax advisor or CPA for the specific calculations based upon your specific situation.

The calculator is presented for informational purposes only. The information presented is not investment, legal, tax or compliance advice. Accruit performs the duties of a Qualified A person acting to facilitate an exchange under section 1031 and the regulations. This person may not be the taxpayer or a disqualified person. Section 1.1031(k)-1(g)(4)(iii) requires that, for an intermediary to be a qualified intermediary, the intermediary must enter into a written "exchange" agreement with the taxpayer and, as required by the exchange agreement, acquire the relinquished property from the taxpayer, transfer the relinquished property, acquire the replacement property, and transfer the replacement property to the taxpayer. Intermediary , and as such does not offer or sell investments or provide investment, legal, or tax advice.