1031 Exchange Form 8824: How to Report Your Exchange
IRS Form 8824, Like-Kind Exchanges, is how you report a 1031 exchange to the IRS. Per the official instructions, you must file it with your tax return “for that year” — the year you transferred the relinquished property — even if you didn’t receive the replacement property until the following year. The form walks you from property descriptions and dates (Part I), through related-party questions (Part II), to the math that determines how much gain you defer, how much you recognize, and what your basis in the new property will be (Part III).
What Form 8824 does
A 1031 exchange doesn’t erase your gain — it defers it, and Form 8824 is the paper trail. The form does three jobs: it proves the exchange met the deadlines (Part I’s dates let the IRS check the 45-day and 180-day requirements of Treas. Reg. §1.1031(k)-1); it flags related-party exchanges subject to the two-year resale rule of IRC §1031(f); and it computes the numbers — realized gain, recognized (taxable) gain, deferred gain, and the carryover basis of your replacement property. Any gain you must recognize — for example, because you received boot — flows from Form 8824 to Schedule D or Form 4797, depending on how you used the property.
When to file: the year of transfer
Two timing points trip people up:
- Exchanges that straddle two tax years still go on the year-of-sale return. Sell in November 2025, close on the replacement in March 2026? The exchange is reported on your 2025 return.
- A late-year sale can shorten your 180 days. The replacement property must be received by the earlier of 180 days after transfer or the due date of your return (including extensions) for the year of transfer — that condition is printed right into the instructions for line 6. If you sell late in the year and your exchange will still be open on your filing deadline, file an extension (Form 4868 for individuals) to preserve the full 180-day window. Our 1031 exchange calculator maps both deadlines from your closing date.
Part I: the properties and the dates (lines 1–7)
Part I is descriptive, but it’s where the IRS checks your deadlines. Line by line, from the 2025 Form 8824:
| Line | What it asks | Watch for |
|---|---|---|
| 1 | Description of like-kind property given up | Only real property goes on lines 1 and 2; note the country if it’s outside the U.S. |
| 2 | Description of like-kind property received | Address, type, or other distinguishable name |
| 3 | Date the property given up was originally acquired | Establishes holding history |
| 4 | Date you actually transferred your property to the other party | Day zero for both exchange deadlines |
| 5 | Date the replacement property was identified by written notice | Must be within 45 days of line 4 — the form itself references the “45-day written identification requirement” |
| 6 | Date you actually received the replacement property | Must be within 180 days of line 4, or your return due date with extensions, whichever is earlier |
| 7 | Was the exchange with a related party, directly or indirectly? | ”Yes” sends you to Part II; “No” skips to Part III |
Lines 4, 5, and 6 are the compliance heart of the form: line 5 minus line 4 must be 45 days or less, and line 6 minus line 4 must be 180 days or less. Both periods run concurrently in calendar days with no weekend or holiday extensions; the only relief is for federally declared disasters under IRS notices.
Part II: related-party exchanges (lines 8–11)
If line 7 is “Yes,” Part II identifies the related party (line 8: name, relationship, taxpayer ID, address) and asks the two questions that enforce IRC §1031(f):
- Line 9: During this tax year — and before the date that is 2 years after the last transfer in the exchange — did the related party sell or dispose of any part of the property they received from you?
- Line 10: Same question for you and the property you received.
If either answer is “Yes,” the deferred gain from line 24 generally becomes taxable on this year’s return — unless a line 11 exception applies: (a) a disposition after the death of either related party, (b) an involuntary conversion where the threat arose after the exchange, or (c) you can establish to the IRS’s satisfaction that neither the exchange nor the disposition had tax avoidance as a principal purpose.
Two follow-on obligations catch people off guard. First, you file Form 8824 for two more years: a related-party exchange is reported in the year of the exchange and for the two years following it, per the instructions. Second, buying your replacement property from a related party is usually not reportable as an exchange at all — the form carries an explicit note that if a related party sold property into the exchange (directly or through an intermediary) and no line 11 exception applies, you report the disposition as if it had been a sale rather than filing Form 8824. The full rules are covered in our guide to related-party 1031 exchange rules.
Part III: the math (lines 12–25)
Part III looks intimidating, but it’s four ideas in sequence. (Lines 12–14 only apply if you also gave up non-like-kind property — say, equipment thrown into the deal — where gain or loss is recognized immediately “as if the exchange had been a sale.”)
What you received (lines 15–17)
- Line 15 is essentially your boot: cash received, the fair market value of non-like-kind property received, plus net liabilities assumed by the other party (debt relief), reduced — but not below zero — by exchange expenses you incurred, such as qualified intermediary fees and certain closing costs. The netting follows Treas. Reg. §1.1031(d)-2: new debt you take on offsets old debt you shed, but borrowing more cannot offset cash you pocket.
- Line 16 is the FMV of the like-kind property you received.
- Line 17 adds them: everything of value you got.
What you gave up (line 18)
Line 18 is the adjusted basis of the like-kind property you gave up, plus net amounts you paid to the other party, plus any exchange expenses not already used on line 15.
Realized vs. recognized gain (lines 19–23)
- Line 19 — realized gain: line 17 minus line 18. This is your true economic gain.
- Line 20 — the deferral engine: the smaller of line 15 or line 19, but not less than zero. Receive no boot and line 20 is zero — full deferral. Receive boot and gain is recognized up to the boot, exactly as IRC §1031(b) requires.
- Line 21 — ordinary income under recapture rules (sections 1245 and 1250, among others). This amount is entered here and on Form 4797, line 16. See our guide to 1031 exchanges and depreciation recapture.
- Line 22 — line 20 minus line 21 — is the capital-gain portion, carried to Schedule D or Form 4797 (unless the installment method applies).
- Line 23 — recognized gain: lines 21 + 22, the total you pay tax on this year.
Deferred gain and your new basis (lines 24–25)
- Line 24 — deferred gain: line 19 minus line 23. This is what the 1031 exchange postponed.
- Line 25 — basis of the replacement property: the sum of lines 18 and 23, minus line 15. This carryover basis is how the IRS “remembers” your deferred gain — it travels with the new property until a taxable sale, another exchange, or a stepped-up basis at death under IRC §1014.
A hypothetical example mapped to the lines
Round, hypothetical numbers for illustration only; exchange expenses and depreciation recapture are ignored to keep the arithmetic clean (in a real exchange, line 21 recapture often applies — see above).
An investor sells a rental for $500,000 (adjusted basis $250,000, $200,000 mortgage paid off) and buys a $450,000 replacement with a $200,000 new mortgage, receiving $50,000 of leftover exchange cash:
| Line | Entry | Amount |
|---|---|---|
| 15 | Cash boot ($50,000); debt relief fully offset by new debt | $50,000 |
| 16 | FMV of replacement property | $450,000 |
| 17 | Line 15 + line 16 | $500,000 |
| 18 | Adjusted basis of property given up | $250,000 |
| 19 | Realized gain (17 − 18) | $250,000 |
| 20 | Smaller of line 15 or 19 | $50,000 |
| 21–22 | Recapture / capital gain split | $0 / $50,000 |
| 23 | Recognized gain | $50,000 |
| 24 | Deferred gain (19 − 23) | $200,000 |
| 25 | New basis (18 + 23 − 15) | $250,000 |
The investor pays tax on $50,000, defers $200,000, and starts the new property with a $250,000 basis.
Multiple properties and multiple exchanges
The instructions handle the two multi-property situations differently:
- More than one exchange in the same year: you may file a summary Form 8824 and attach your own statement showing all the requested information for each exchange.
- Multi-asset exchanges (more than one group of like-kind properties, or property plus cash or other non-like-kind property): don’t complete lines 12 through 18. Attach your own statement showing how you figured realized and recognized gain, and enter the results on lines 19 through 25. This can come up when you exchange one property for two.
State reporting: California’s FTB 3840 and other analogs
Most states follow the federal treatment, but reporting can differ — see our state-by-state 1031 guide. California is the big one: if you exchange California property for out-of-state property and any California-source gain goes unrecognized, the Franchise Tax Board requires Form FTB 3840 — filed for the year of the exchange and every subsequent year until the deferred California gain is recognized, attached to your California return or filed on its own if you have no other California filing requirement. Skip it and the FTB “may issue a Notice of Proposed Assessment to adjust your income for the previously deferred gains plus any applicable penalties and interest.” Details in our California 1031 exchange rules guide and the California state guide.
Common Form 8824 mistakes
- Filing in the wrong year. The form goes with the return for the year of transfer, not the year the exchange completed.
- Losing part of the 180 days. Late-year sellers who don’t extend their return can have the exchange period cut short by their filing deadline.
- Netting line 15 incorrectly. Debt relief nets against new debt and cash you pay in — but cash received is boot no matter how much you borrow on the replacement (Treas. Reg. §1.1031(d)-2).
- Forgetting the related-party follow-up. Related-party exchanges require Form 8824 filings for two additional years, and an early resale by either party can trigger the deferred gain.
- Not carrying amounts to the right forms. Line 21 goes to Form 4797, line 16; line 22 to Schedule D or Form 4797; installment reporting may involve Form 6252.
- Ignoring state filings. California’s FTB 3840 is an annual obligation that outlives the exchange year.
Form 8824 is where every earlier decision in your exchange — identification, debt replacement, boot — becomes visible to the IRS, so have your CPA prepare it alongside the closing statements from both legs of the exchange.
Frequently asked questions
With your federal tax return for the year you transferred the relinquished property, even if you received the replacement property the following year. If the exchange is still open when your return is due, file an extension — the 180-day exchange period ends at the earlier of 180 days after transfer or your return due date including extensions.
The form is how you claim nonrecognition under IRC §1031. Without it, the IRS sees a property sale reported by the closing agent (typically on Form 1099-S) with no explanation of the deferral, inviting a mismatch notice or examination. And if gain should have been recognized — because of boot or a failed related-party exchange — omitting the form understates your tax.
Line 20 takes the smaller of line 15 (boot: cash, non-like-kind property, and net debt relief, reduced by exchange expenses) or line 19 (realized gain). Line 21 carves out any ordinary-income recapture under sections 1245/1250, and line 23 totals the recognized gain. If you receive no boot, recognized gain is zero and the entire gain is deferred on line 24.
Generally one form per exchange. If you completed multiple exchanges in one year, the IRS instructions let you file a summary Form 8824 with an attached statement covering each exchange. For multi-asset exchanges, you skip lines 12–18, attach your own gain computation, and complete lines 19–25.
Yes. If you exchanged California property for out-of-state property and deferred California-source gain, you must file FTB Form 3840 for the year of the exchange and every subsequent year until that gain is recognized — even if you otherwise have no California filing requirement. Failure to file can lead the FTB to assess tax on the deferred gain plus penalties and interest.
This article is for educational purposes only and is not legal or tax advice. Form 8824 reporting is governed by IRC §1031, the Treasury Regulations, and the current IRS form instructions; consult a qualified tax professional about your specific situation.
Primary sources: IRS Form 8824 (2025) · IRS Instructions for Form 8824 · IRC §1031 (Cornell LII) · Treas. Reg. §1.1031(d)-2 (Cornell LII) · Treas. Reg. §1.1031(k)-1 (Cornell LII) · California FTB: Reporting like-kind exchanges (FTB 3840)