Tax Free Property Exchange Forms

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Commonly Asked Questions about Tax Free Property Exchange Forms

What is the IRS form for tax free exchange?

You must report an exchange to the IRS on Form 8824, Like-Kind Exchanges and file it with your tax return for the year in which the exchange occurred. If you do not specifically follow the rules for like-kind exchanges, you may be held liable for taxes, penalties, and interest on your transactions.

What would disqualify a property from being used in a 1031 exchange?

Under IRC 1031, the following properties do not qualify for tax-deferred exchange treatment: Stock in trade or other property held primarily for sale (i.e. property held by a developer, flipper or other dealer) Securities or other evidences of indebtedness or interest. Stocks, bonds, or notes.

What are the IRS rules for a 1031 exchange?

The three primary 1031 exchange rules to follow are: Replacement property should be of equal or greater value to the one being sold. Replacement property must be identified within 45 days. Replacement property must be purchased within 180 days.

What is not allowed in a 1031 exchange?

Here are examples of properties ineligible for a 1031 exchange: Primary residences: A 1031 exchange is specifically intended for investment or business properties. Personal properties are not eligible. Vacation homes: Vacation homes generally do not qualify if used for personal reasons.

What is the 2 year rule for 1031 exchange?

Section 1031(f) provides that if a Taxpayer exchanges with a related party then the party who acquired the property in the exchange must hold it for 2 years or the exchange will be disallowed.

What is the IRS guidance on 1031?

IRC Section 1031 provides an exception and allows you to postpone paying tax on the gain if you reinvest the proceeds in similar property as part of a qualifying like-kind exchange. Gain deferred in a like-kind exchange under IRC Section 1031 is tax-deferred, but it is not tax-free.

What form do you need for a 1031 exchange?

Taxpayers report exchanges on Form 8824, like-kind exchanges, attaching it to their returns. The form asks for: Descriptions of properties sold and purchased. Key dates including when the sold property was originally acquired and when the replacement property was identified and acquired.