IRS form 8824 is used to report an IRC section 1031 exchange. This code section provides an exception to the general rule: That upon disposition of a capital asset tax will be "recognized" (tax paid) on the gain. Instead, if ALL of the rules of IRC section 1031 are followed then tax will be "deferred" on the gain.
These instructions are designed to assist individuals and tax preparers in the completion of IRS Form 8824. They are more particularly designed with real estate transactions in mind.
If you have followed the rules and completed an exchange, then this program will guide you in completion of the IRS Form 8824.
If you have bought and sold several properties, you should decide which properties are part of each exchange, and a separate Form 8824 should be completed for
each exchange.
How does it work?
For each exchange you will be asked to complete a questionaire about each property bought or sold
You will them be able to review your input and revise it if necessary.
Once you have made your payment, the Form 8824 and the accompanying worksheets will be generated.
Each input screen will have a  icon, which you can click for further explanation of the information requested.
If you have a tax question, you can use our "Ask a Tax Attorney" service, which will allow you to submit your question to our Staff Attorney/CPA.
Please note: THIS FORM IS BASED ON SECTION 1250 DEPRECIATION (THE MOST COMMON). IF THE DEPRECIATION ON THE PROPERTY YOU SOLD IS UNDER ANOTHER SECTION, PLEASE BE SURE THE FINAL FORM REFLECTS THOSE RULES. THIS PROGRAM DOES NOT HANDLE REPORTING OF SECTION 1043 CONFLICT OF INTEREST SALES.
Some basic definitions which might be of help:
Relinquished Property is the property given up (sold).
Replacement Property is the property received (bought).
The Exchanger is the taxpayer performing the 1031 exchange.
Qualified Intermediary describes the company holding the exchange proceeds between the sale and the purchase.
Realized Gain is the gain or profit that you made on the sale of your relinquished property.
Recognized Gain is that part of the realized gain on which you must now pay taxes.
REMEMBER: The purpose for performing a 1031 exchange is to NOT recognize gain on realized gain. For full tax deferral to occur the exchanger must trade like for like and equal or up in value and in equity.
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