Property Exit Strategy Calculator
Compare options side-by-side with tax and growth potential for each.
Your Property & Sale Information
Plug in what you know. The calculator estimates the rest, edit any field.
Has this property been part of a prior 1031 exchange? Toggle on to carry basis forward from the relinquished property.
Original (relinquished) property
Sale & Tax Assumptions
Financing and Terms
Property Assumptions
Investment Full-Cycle Assumptions
More information
"After-tax wealth at exit": estimates a hypothetical sale at the end of the horizon and subtracts cap-gains + recapture tax from each scenario's modeled equity.
"Step-up in basis": sets that exit tax to zero for the Hold, DST, LBD, and Passive paths (the Sell & Pay Tax path already realized its tax up-front, so step-up only affects post-sale portfolio gains).
1031 DST Assumptions
Leveraged Bonus Depreciation Assumptions
More information
How this scenario works: Sell the rental and invest just enough into the leveraged BD fund to fully offset the gain. At a 2× multiplier, $100K invested generates $200K of passive loss. The passive loss eliminates the entire taxable gain → $0 tax due in Year 1.
Where the freed cash goes: The remaining "freed cash" is invested in the passive alternatives portfolio at the rate set in the Alternatives section. The LBD fund grows on its own track at the cash and appreciation rates above.
Deferred-tax exposure: All deferred tax becomes due upon the LBD fund's eventual disposition (when depreciation recapture applies); step-up in basis at death may eliminate this exposure entirely.
Alternative Portfolio Assumptions
More information
How cash yield works here: Cash yield is paid out each year; the remainder (Total Return − Cash Yield) compounds as portfolio growth. Default of 11% total = 4.5% cash + 6.5% growth.
Results are illustrative estimates based on general assumptions, not on any specific investment offering. This calculator does not constitute an offer, solicitation, or recommendation to buy, sell, or hold any security or investment strategy. Consult your tax, legal, and financial professionals before acting on any of these scenarios.
Your Property Options Comparison
Based on a 10-year reinvestment/hold period.
Detailed Comparison
All five paths, side by side.
How we calculated these numbers
Tax on Sale
Adjusted basis = (Original purchase price + Capital improvements) − Accumulated depreciation.
Total gain = (Sale price − Selling costs) − Adjusted basis.
Depreciation recapture = min(Accumulated depreciation, Total gain) × 25% federal.
Capital gain = (Total gain − Recapture portion) × (Federal LTCG rate + NIIT if applicable + State rate).
Total tax = Recapture tax + Capital gain tax + State tax on full gain.
Prior 1031 Exchange (when toggle is on)
Carryover basis from a prior 1031 exchange is calculated as Original (relinquished) property purchase price + Capital improvements − Depreciation taken on the original property. This figure replaces "Original Purchase Price" in the adjusted-basis formula above. Cumulative depreciation taken across the original (relinquished) and replacement properties is included in the §1250 depreciation recapture calculation at projected sale. Annual depreciation on the replacement property is assumed to follow a fresh schedule based on the replacement property's cost; the carryover basis treatment for ongoing depreciation under Reg. §1.168(i)-6 may vary by election and should be confirmed with the client's tax advisor.
Hold (Status Quo)
No sale at Year 0, no tax event. Annual cashflow = (NOI grown at the NOI growth rate × (1 − capex reserve %)) − Debt service. When "Apply income tax to rental cashflow" is enabled, ordinary tax is applied to (net NOI − annual depreciation − mortgage interest). Wealth at exit = Property value (grown at appreciation rate) − Remaining mortgage (reduced by annual paydown). If "After-tax wealth at exit" is enabled, a hypothetical sale at horizon end is taxed (recapture + cap gains + NIIT + state); "Step-up in basis" zeroes that exit tax.
Sell & Pay Tax
Net cash to investor = (Sale price − Selling costs − Mortgage payoff − Total tax). Cash reinvested at the cash yield. Wealth at exit = After-tax cash compounded at the cash yield over the horizon.
Sell & Invest Passively
Same after-tax cash as the Sell & Pay Tax path, but invested at the higher assumed passive portfolio total return. Shown to compare an "exit real estate entirely" path.
1031 Exchange to DST
Tax fully deferred (assuming compliant exchange). Equity reinvested = (Sale price − Selling costs − Mortgage payoff) × (1 − DST load). Annual cashflow = Equity × DST cash-on-cash. Wealth at exit = Equity grown at DST appreciation. Tax deferred is not tax eliminated, basis carries over. When "After-tax wealth at exit" is enabled, exit tax is calculated on the gain over the carried-over basis from the original property. "Step-up in basis" zeroes that tax (a key estate-planning advantage of swap-til-you-drop).
Sell & Leveraged Bonus Depreciation
Modeled as a 2.0× (configurable) deduction multiplier: $1 invested in the LBD fund generates $2.00 of Year-1 passive loss. The exact multiplier depends on the specific fund's LTV and land allocation; typical range is 2.0–2.7× at current 100% bonus depreciation rates. Required LBD investment = Total gain ÷ Multiplier. The passive loss fully offsets the taxable gain at the federal level. Freed cash = Gross equity − LBD investment, which is then invested in the passive alternatives portfolio at the rate set in the Alternatives section. All deferred tax becomes due at the LBD fund's eventual disposition (when depreciation recapture applies). The LBD fund itself generates cash distributions and appreciation per the rates in the LBD section. Note on state conformity: states vary in how they treat federal bonus depreciation; this model assumes full conformity for simplicity, but actual state tax liability may differ in non-conforming states (CA, NY, NJ, MD, and others). Note on passive activity rules: the full passive-loss offset shown assumes the disposed-property gain qualifies as passive income. Real Estate Professionals (IRC §469(c)(7)) or investors with material participation should consult a tax advisor; the offset treatment may differ.
What this calculator does not model
• Income tax on DST/Fund distributions (some offset by depreciation pass-through; varies)
• Variable interest rates and refi closing costs
• Vacancy assumptions beyond capex reserve %
• Sponsor fees beyond DST upfront load
• State-by-state quirks (e.g., WA cap-gains threshold, AR 50% LTCG exclusion)
• Future bonus depreciation legislative changes (default reflects current 100% bonus depreciation)
• State conformity to federal bonus depreciation (assumed: none)
Ready to model your actual numbers?
Calculators handle the math. We help you figure out what to do with it. Bring us your actual numbers and we'll talk through which path fits your situation, your timing, and what you want next.
Schedule a ConsultationImportant Disclosures
This calculator is provided by Tangible Wealth Solutions for educational and informational purposes only. It is not an offer to buy or sell securities and does not constitute investment, tax, or legal advice. Outputs are hypothetical estimates based on inputs you provide and simplified assumptions; actual results will differ, and results may vary with each use and over time. All investing involves risk, including loss of principal. Markets fluctuate and cannot be predicted, and no investment strategy is guaranteed to achieve its objectives. Past performance is not indicative of future results. Speak to a qualified financial, tax, and legal professional before making any investment decision.
Scope of Analysis & Strategy Selection
The universe of strategies considered by this calculator is limited to the five archetypes shown: (1) Hold the property, (2) Sell & pay tax, (3) Sell & reinvest in a passive portfolio, (4) 1031 Exchange into a Delaware Statutory Trust, and (5) Sell & pair with a Leveraged Bonus Depreciation fund. These five archetypes were selected to illustrate the primary objectives a property owner weighs at the point of sale — continued rental income, tax deferral or elimination, and long-term growth — and are not an exhaustive or ranked list of the options available to you. The tool does not select securities; it models generic strategy archetypes using inputs and assumptions you provide. Tangible Wealth Solutions and its representatives may earn compensation when clients invest in DST or Leveraged Bonus Depreciation offerings distributed through Emerson Equity LLC; the inclusion of these scenarios reflects the strategies TWS is positioned to help implement and should not be interpreted as a recommendation that they are superior for your situation. Other strategies not modeled here, including but not limited to Qualified Opportunity Zone funds, oil & gas working interests, NNN direct ownership, conservation easements, charitable remainder trusts, installment sales under IRC §453, and direct reinvestment in other real estate, may have characteristics similar or superior to the strategies analyzed and should be evaluated with a qualified advisor.
1031 / DST Risk Disclosure
There is no guarantee that any strategy will be successful or achieve investment objectives. DSTs and 1031 exchanges involve illiquid securities offered through private placements, potential loss of property value, foreclosure risk on financed properties, suspension of cash flow distributions, and adverse tax rulings that may cancel deferral. Costs associated with the transaction may impact returns and may outweigh the tax benefits.
Leveraged Bonus Depreciation Risk Disclosure
Leveraged real estate funds use significant debt, magnifying risk. Bonus depreciation rates are subject to legislative change. Passive loss treatment depends on the investor's tax profile and activity classification under IRC §469. Recapture of accelerated depreciation may apply upon exit. The tax-shielding benefit modeled here assumes the investor has sufficient passive gain to absorb the deduction and that the activity qualifies as passive.
Securities offered through Emerson Equity LLC, Member FINRA/SIPC. Only available in states where Emerson Equity LLC is registered. Emerson Equity LLC is not affiliated with Tangible Wealth Solutions or any other entity identified in this communication.