CalculateRealEstateROI

Taxes

Should I always 1031 or just pay the tax?

1031 when redeploying into a better asset; pay tax when consuming or done investing.

Reviewed by Keiron Brown, Founder & Editor, CalculateRealEstateROI · Educational estimates only — not investment, financial, tax, or legal advice

Direct answer

1031 when redeploying into a better asset; pay tax when consuming or done investing.

Expanded explanation

1031 isn't free — it locks you into more real estate. Sometimes paying long-term capital gain is the right move (retirement, lifestyle, opportunity outside real estate).

Examples

  • $500k gain × 23.8% LTCG + recapture = ~$150k tax; 1031 defers all.

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