The results above show the economic difference between executing a 1031 exchange and completing a fully taxable sale — measured in deployable investment capital, not tax percentages.

What “Capital Preserved” Really Represents

The capital preserved via exchange is the amount of equity that would otherwise be lost to taxes at sale. By deferring those taxes, this capital remains invested and available to:

• Increase the purchase price of a replacement property

• Reduce leverage and debt risk

• Improve long-term cash flow

• Compound returns over multiple investment cycles

Even modest tax deferral amounts can materially change future portfolio outcomes when reinvested.

Why Reinvestable Equity Matters More Than Tax Rates

Tax rates alone do not determine outcomes — reinvestable equity does.

Two investors selling identical properties can experience dramatically different long-term results depending on how much capital remains invested after disposition. The exchange scenario preserves purchasing power, allowing investors to:

• Acquire larger or higher-quality assets

• Transition into different property types

• Reposition portfolios without shrinking equity

This tool focuses on what stays invested, not just what is deferred.

Understanding the Taxable Sale Baseline

The taxable sale scenario establishes a realistic baseline by accounting for:

• Depreciation recapture

• Federal and state capital gains taxes

• Net Investment Income Tax (where applicable)

• Debt payoff and selling costs

This prevents overestimating available capital and helps investors evaluate exchange decisions using conservative assumptions.

Strategic Implications to Consider

When reviewing your results, consider:

• How additional preserved equity changes your target acquisition range

• Whether increased buying power improves deal quality or risk profile

• How repeated tax deferral across multiple exchanges compounds over time

The value of a 1031 exchange is often cumulative, not transactional.