1031 Like Kind Exchange

Like-Kind (Code Sec. 1031) Real Property Exchanges—Forms 8824, 8849.

No gain or loss is recognized on the exchange of real property held for productive use in a trade or business or for investment if the real property is exchanged solely for like-kind real property that is to be held either for productive use in a trade or business or for investment. Whether real property is trade or business or investment property is determined by the taxpayer's intent at the time of the exchange. Multi-party exchanges and deferred exchanges can qualify. However, gain, but not loss, is recognized if boot is also received.

This nonrecognition provision doesn't apply to any exchange of real property held primarily for sale.

Nonrecognition under Code Sec. 1031 is mandatory if the conditions are met.

Report a 1031 like-kind exchange on Form 8824.

If gain is recognized on the exchange because boot (money and/or non-like-kind property) is received, also report the transaction on Form 8849 and Schedule D of the applicable tax form (e.g., Form 1040, Form 1041, Form 1065, or Form 1120), Form 4797, or Form 6252 (whichever applies). For exchanges completed before Jan. 1, 2018, in addition to exchanges of real property like-kind exchanges of like-kind personal or intangible property also were tax-free. Under a transition rule, the real-property-only limitation didn't apply to an exchange, if the property disposed of or the property received by the taxpayer in the exchange was disposed of or received before Jan. 1, 2018.

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