Reporting your 1031 exchange to the IRS is an essential step in the exchange process. But many investors aren’t sure how to appropriately report their exchange. In this article, we are going to discuss how to properly report your 1031 exchange to the IRS.
IRS Form 8824
1031 exchanges should be reported using IRS form 8824. This form is a sort of worksheet that explains to the IRS the details of your exchange – your relinquished property, your replacement property, etc.
It is important to file this form so that the IRS is aware that you are conducting a 1031 exchange. Otherwise they may think that you still owe taxes. When you sell a piece of real estate (your relinquished property), the title company that closes the transaction is required to report the sale to the IRS on a 1099. If you fail to file form 8824 detailing your exchange, the IRS is likely to think that you have not paid your capital gains taxes on the sale.
It’s always a good idea to involve your CPA in this process, as they will know your tax situation best.
St. Paul 1031 Exchange Company
If you are considering a like-kind exchange of real property, your first step should be to consult with a qualified intermediary about your transaction. A skilled intermediary can help you wrap your head around the exchange, advise you on your best property options, and prepare all of your 1031 documents for closing. At CPEC1031, LLC, we have twenty years of experience helping clients with their 1031 exchanges. Contact us today at our downtown Minneapolis office to learn more about the exchange process and get started with your exchange.
Start Your 1031 Exchange: If you have questions about 1031 exchanges, feel free to call me at 612-643-1031.
Defer the tax. Maximize your gain.
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