IRS Form 8824 — Like-Kind Exchanges Walkthrough
IRS Form 8824 (Like-Kind Exchanges) is the federal tax form taxpayers use to report a 1031 exchange to the IRS. It's filed with the federal tax return for the year the relinquished property closed and discloses the exchange structure, dates, fair market values, adjusted basis, and recognized vs. deferred gain.
What it is
Form 8824 is a two-page IRS form that documents a like-kind exchange for federal tax purposes. The form has three main parts: Part I identifies the parties and properties involved; Part II addresses related-party exchanges; Part III computes realized gain, recognized gain (if any), and the new basis in the replacement property.
Who uses it
Any taxpayer who completes a 1031 exchange in a given tax year must file Form 8824 with their federal return. Your CPA prepares and files this on your behalf; your Qualified Intermediary provides the underlying transaction data. Do not skip Form 8824 — a 1031 exchange that is not reported on Form 8824 can trigger IRS inquiry.
Part I — Information on the Like-Kind Exchange
Part I is the identifying information section. It covers property descriptions, dates, and whether the exchange involved related parties.
- Line 1 — Description of property given up
- Street address, APN, or legal description of the relinquished property (downleg).
- Line 2 — Description of property received
- Street address, APN, or legal description of the replacement property (upleg).
- Line 3 — Date property given up was originally acquired
- Your original purchase date of the relinquished property.
- Line 4 — Date you actually transferred your property to other party
- Closing date of the relinquished property sale.
- Line 5 — Date like-kind property you received was identified
- The day the identification form was delivered to your QI (must be on or before day 45).
- Line 6 — Date you actually received the like-kind property
- Closing date of the replacement property acquisition (must be on or before day 180).
- Line 7 — Related-party exchange?
- Yes/No. Triggers Part II if applicable.
Part II — Related Party Exchange Information
Part II applies only if you exchanged property with a related party. Related-party exchanges have strict two-year holding period rules on both sides — disposition of either property within two years typically disqualifies the exchange (with narrow exceptions for death or involuntary conversion).
Part III — Realized Gain, Recognized Gain, and Basis Calculation
Part III is where the tax math happens. The form walks through computing your realized gain (FMV of what you received minus adjusted basis of what you gave up), then determines the portion recognized (taxable — typically from boot) and the portion deferred.
- Line 15 — Cash received, FMV of other property received
- Any cash boot or non-like-kind property (other than debt relief covered by lines 16-18) received in the exchange.
- Line 16–18 — Liabilities assumed/reduced analysis
- Net debt relief analysis — reduction in debt not offset by new debt or cash contributed creates mortgage boot.
- Line 19 — FMV of like-kind property received
- Fair market value of the replacement property.
- Line 20 — Amount of realized gain
- Computed as Line 19 + Line 15 + Line 17 minus Line 18 minus adjusted basis of property given up.
- Line 21 — Smaller of line 20 or 15
- Gain recognized from boot, if any.
- Line 25 — Basis of like-kind property received
- Your new basis in the replacement property, which carries forward the deferred gain.
Common mistakes
- Not filing Form 8824 at all — the exchange must be reported
- Filing Form 8824 in the wrong tax year (it's the year of the relinquished property sale)
- Miscalculating basis on Line 25 — which affects future depreciation and gain
- Missing related-party disclosure on Line 7
- Not reconciling Form 8824 with Form 4797 (business property) or Schedule D (investment property)
Frequently asked questions
Do I file Form 8824 or my QI?
You (the taxpayer) file Form 8824 with your federal return. Your CPA typically prepares it using data from your QI's final exchange accounting. The QI does not file it for you.
What if the exchange failed?
If your 1031 exchange failed (missed deadlines or other disqualification), the relinquished sale is reported as a taxable sale on Form 4797 or Schedule D without Form 8824. You do not file Form 8824 for a failed exchange.
Do I need to file a state version of Form 8824?
Depends on the state. Some states (California, Massachusetts, Montana, Oregon) require annual informational filings during the deferral period if they maintain clawback regimes. Verify with a state-specific CPA.