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You must report the like-kind exchange on California Like-Kind Exchanges (FTB 3840) if both of the following occur: An exchange of one or more California real properties for one or more real properties located outside of California. Any portion of the California sourced realized gain or loss is not recognized.
Purpose. Use form FTB 3840 to report like-kind exchanges of California business or investment property for out of state like-kind property, and to allocate the California source deferred gain to the properties received in the exchange.
A successful 1031 exchange isnt a do-it-yourself project. You must follow IRS rules to realize the tax deferral benefits and youll need a middle person, called a qualified intermediary (QI).
Filing a 1031 exchange on your California state tax return is pretty straightforward. If you perform a like-kind exchange of California property, you must report that exchange on FTB Form 3840, provided you do both: Perform a 1031 exchange for property outside of California, and. Defer gain or loss under IRC 1031.
California recognizes 1031 Exchanges which allows an investor to defer capital gains taxes as long as you are purchasing another like-kind property to replace the one you are selling. California does recognize it if you purchase your upleg in another state, but beware of the above Clawback rule.
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Internal Revenue Code Section 1031 for tax-deferred exchanges is a federal tax code, so technically its recognized in all 50 states.
You must report the like-kind exchange on California Like-Kind Exchanges (FTB 3840) if both of the following occur: An exchange of one or more California real properties for one or more real properties located outside of California. Any portion of the California sourced realized gain or loss is not recognized.
Internal Revenue Code Section 1031 for tax-deferred exchanges is a federal tax code, so technically its recognized in all 50 states.
Your 1031 exchange must be reported by completing Form 8824 and filing it along with your federal income tax return. If you completed more than one exchange, a different form must be completed for each exchange. For line-by-line instructions on how to complete form, download the instructions here.
Filing a 1031 exchange on your California state tax return is pretty straightforward. If you perform a like-kind exchange of California property, you must report that exchange on FTB Form 3840, provided you do both: Perform a 1031 exchange for property outside of California, and. Defer gain or loss under IRC 1031.

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