Searching for the 1031 exchange form? The IRS does not have a Form 1031. A like-kind exchange is reported on Form 8824, Like-Kind Exchanges, filed with your tax return. This page walks through when you file it, what each part asks for, how it works when the exchange crosses into a new tax year, and the state forms that can come with it. Your CPA or tax preparer completes the form; your qualified intermediary's exchange documents supply most of the dates and figures.
When You File Form 8824
File Form 8824 with your tax return for the year you transferred your relinquished property in a like-kind exchange. If the exchange was with a related party, you also file it for each of the 2 following years.
- Year of the sale of your relinquished property: file Form 8824 with that year's return
- Related-party exchange: also file for the 2 years after (Parts I and II)
- Form 8824 also covers section 1043 conflict-of-interest sales by certain federal officials (Part IV)
Sources: IRS: Instructions for Form 8824; IRS: About Form 8824
Exchanges That Cross Into a New Tax Year
You must receive the replacement property by the earlier of Day 180 or the due date, including extensions, of your tax return for the year you transferred the property you gave up. If you sell late in the year, extend that year's return so the due date does not cut the 180 days short. The form is still filed for the year of the sale, even when the replacement closes the next year.
Sources: IRS: Instructions for Form 8824; 26 U.S.C. 1031 (govinfo.gov)
Part I: The Exchange Details
Part I asks for the facts of the exchange, most of which come from your closing statements and the exchange documents.
- Description of the property given up and the property received
- Date you originally acquired the property given up
- Date you transferred it, and the date the replacement was identified by written notice
- Date you received the replacement property
- Whether the exchange was with a related party, directly or indirectly, such as through an intermediary
Sources: IRS: Form 8824
Part II: Related Party Exchanges
If you exchanged with a related party, Part II asks whether either of you sold or disposed of the property received within 2 years after the last transfer in the exchange. If so, the deferred gain is reported on your return for the year of that disposition, unless an exception applies: a disposition after the death of either party, an involuntary conversion, or a disposition shown not to have tax avoidance as a principal purpose. The instructions say an exchange made through an intermediary, such as a qualified intermediary, can still be a related-party exchange.
Part III: Gain, Boot and Basis
Part III works out what is taxed now and what carries forward. It starts with your realized gain, compares it with any boot you received, and ends with the basis of the property you received.
- Line 15: boot, meaning cash, other property and net liabilities assumed by the other party, reduced by exchange expenses
- Line 19: realized gain or loss
- Line 23: recognized gain, the part taxed now
- Line 24: deferred gain or loss
- Line 25: basis of the like-kind property received, split on lines 25a to 25c
Form 1099-S Still Reports the Sale
The settlement agent, or other person responsible for closing, generally files Form 1099-S for the sale of your relinquished property. The IRS instructions say a sale or exchange is reportable even if it is not currently taxable, so expect a 1099-S for the property you sold. Form 8824 is where the deferral is shown.
Sources: IRS: Instructions for Form 1099-S
State Forms That Can Go With It
Some states require their own filing when you exchange property in that state for property elsewhere. Oregon requires Form OR-24 for the year of the exchange and each year after, until you dispose of the replacement property. California requires Form FTB 3840 each year, generally until the California-source deferred gain is recognized, regardless of where you live.
Sources: Oregon DOR: Form OR-24 instructions; California FTB: Form FTB 3840 instructions
Frequently Asked Questions
No. Section 1031 is the part of the tax code that allows the exchange. The exchange itself is reported on IRS Form 8824, Like-Kind Exchanges, filed with your tax return for the year you sold the relinquished property.