IRS Form 8824: Report an Exchange on Your Tax Return

While a 1031 Exchange does provide the opportunity for tax savings, it is still important to report each exchange to the IRS. This enables the IRS to recognize the profits used from your relinquished property should not be taxed according to boilerplate capital gains rates, but should rather be deferred since the funds were transferred through a qualified intermediary into the equity share of a newly acquired property.

What Is Form 8824?

The IRS created Form 8824 to help real estate investors to report their exchanges on their tax returns. The IRS explains: “If you made more than one like-kind exchange, you can file a summary on one Form 8824 and attach your own statement showing all the information requested on Form 8824 for each exchange.”

What Should I Report on Form 8824?

When reporting an exchange to the IRS using Form 8824, investors should include:

• Descriptions of the properties exchanged
• Dates that properties were identified and transferred
• Any relationship between the parties to the exchange
• Value of the like-kind and other property received
• Gain or loss on sale of other (non-like-kind) property given up
• Cash received or paid; liabilities relieved or assumed
• Adjusted basis of like-kind property given up; realized gain

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What's Changed on Form 8824 in 2023?

The IRS has introduced several key updates to Form 8824 for the 2023 tax year, adding new reporting requirements that filers should be aware of. Here’s a breakdown of the most important changes:

• New Line 12a: Taxpayers must now report a description of any other (non-like-kind) property that was given up in an exchange. This additional information is required to provide more transparency around transactions that involve non-like-kind property.

• New Line 15a: Similarly, Line 15a has been added to capture details about any non-like-kind property received in an exchange. Like Line 12a, this line increases reporting requirements when non-like-kind assets are involved.

• New Lines 25a, 25b, and 25c: These new lines require taxpayers to disclose the basis allocable to different property types, including sections 1250 (depreciable real property), section 1245 (depreciable personal property), and intangible property treated as real property. If applicable, these lines need to be filled out to ensure accurate tax reporting of property involved in an exchange.

For electronic filers, it’s important to note that the new lines (12a, 15a, and 25a through 25c) are not available directly on the e-filed version of Form 8824. Instead, any information applicable to these lines must be reported on a separate sheet and attached to the form during submission.

These updates reflect the IRS’s continued focus on detailed reporting of exchanges, particularly when non-like-kind or depreciable properties are involved. Taxpayers should take care to review these changes to ensure compliance.

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Who has to fill out Part IV of form 8824?

Certain members of the executive branch of the federalgovernment and judicial officers of the federal government use PartIV to elect to defer gain on conflict-of-interest sales. Judicial officersof the federal government are the following.

1. Chief Justice of the United States.
2. Associate Justices of the Supreme Court.
3. Judges of the:
   1. United States courts of appeals;
   2. United States district courts, including the district courts inGuam, the Northern Mariana Islands, and the Virgin Islands;
   3. Court of Appeals for the Federal Circuit;
   4. Court of International Trade;
   5. Tax Court;
   6. Court of Federal Claims;
   7. Court of Appeals for Veterans Claims;
   8. United States Court of Appeals for the Armed Forces;
   9. Any court created by an Act of Congress, the judges of which are entitled to hold office during good behavior.

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View 2023 Form 8824

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View 2023 Instructions for Form 8824