can I use Turbo tax premier 2024 to handle 1031 exchange which sold one property to buy two properties?

[Stefan_from_CV]

I have Turbo tax premier 2024 desktop version.

I want to file 1031 an exchange which I sold one property to bought two properties.

• I sold one delinquent property in 2024, and bought two replacement properties in 2024, followed by 45 days and 180day requirement
•  I was able to go through like-kind exchange (Exchange 1031) to file Add exchange for 1 to 1 exchange, but not able to do 1 to 2 exchanges, because TurboTax did not prompt any questions to ask the 1 to 2 exchange scenarios.  

To solve my problem, I have worked with 3 live experts and spend at least 2 hours for each of them in the last few days. But no one can guide to through 1 to2 Exhange successfully. 

I am wondering if I should upgrade to business version.

[DianeW777]

Yes, you can use TurboTax Desktop Premier for your situation. Follow the steps below to handle your exchange of one property for two properties.

Some explanations may be helpful.

If you receive cash, relief from debt, or property that is not like-kind, you may trigger some taxable gain in the year of the exchange. There can be both deferred and recognized gain in the same transaction when a taxpayer exchanges for like-kind property of lesser value.

• IRS Fact Sheet-1031 Exchange
• Instructions Form 8824

Here are some notes and steps that may make the process easier for you to complete your 1031 exchange.  

• You should indicate it was rented all year just like you never gave it up when entering the original property basis in each new property.

The new property is treated like it was the old property, in other words nothing changes except that you may have a new asset to place in service (add as a new asset) for any buy up/added cash on the exchange.  Below are instructions that should help you complete the process and/or review your own steps.

Example to arrive at asset cost basis for each new property:

As an example, if you have a total purchase value of the two properties received of $1,037,100 ($612,100 + $425,000) or when dividing each by the total you have the following percentages for the two properties received:

1. Rental 1 = 59%
2. Rental 2 = 41%

• You can use these percentages on the remaining basis for building and land on the original basis of the property traded to enter as an asset for each of these properties (use the original date placed in service).
• Likewise for your new asset (any money, debt or other property given up in addition to your property traded) use these percentages to arrive at the cost basis for a new asset placed in service on the day of the exchange.

Next you will complete the like kind exchange, Form 8824 (Section 1031 exchange):

1. Use the Search (upper right) > Type like kind > Press enter > Click on the Jump to... link
2. Select the checkbox beside 'Any additional like-kind exchanges (section 1031)' > Continue
3. Complete the information for the 'Real estate given up'  and 'Like-Kind Property Given Up' > Continue
4. Name the event > Continue > Complete the information for the 'Like-kind property received'
5. If you did not give unlike property in the exchange click 'No' and  continue past these screens, if 'Yes' answer the questions.
6. Enter any exchange expenses (sales expenses) > Continue to see your deferred gain.

@Stefan_from_CV

[Edited: 03/10/2025 | 3:22 PM PST]

[Stefan_from_CV]

Thank you for so much for the quick response. I think I somewhat understand what you said, but not sure how to do it with Turbo tax.

1. I want to confirm, when you explained me the steps, did you picture the steps in Form 8824? or mixed with Form Model and UI Model? With UI Model, I went to Sale of Business Property ->Any Other Property Sales-> Selected Any additional Like-Kind exchange (Section 1031)-> Entered information of Real Estate give up ->Entered one newly property received ->Answered no to Related party->Answered no to different property give-up ->Answered no to Different Property receive ->Entered Exchange expense ->You Like-Kind exchange result->new  property basis : entered prorated property basis after calculation.  At this point, I anticipate Turbo tax ask me question like did you purchase another like-kind property, but this kind of question never prompt  

2. Per IRS : "

Reporting of multi-asset exchanges.

If you transferred and received (a) more than one group of like-kind properties, or (b) cash or other (non-like-kind) property, don't complete lines 12 through 18 of Form 8824. Instead, attach your own statement showing how you figured the realized and recognized gain, and enter the correct amount on lines 19 through 25. Report any recognized gains on your Schedule D (Form 1040); Form 4797, Sales of Business Property; or Form 6252, Installment Sale Income, whichever applies." My question is how I can attach my own statement with Turbo Tax

3. Additional information, the transactions of the two like-kind were end of December, so the two rental houses did find renters, so I did not enter information of these two rentals at Rental Properties and Royalties section. 

Thanks

[DianeW777]

It depends on what you want to do. If you mail your return you can include your statement for the separation of the properties. You will actually separate them on your tax return so it's already self evident. On the like kind, Form 8824, you can lump together so all is accounted for, then complete the asset section as explained and e-file your return. 

You will always have the document and Section 1031 documentation should the IRS request it later. Keep in mind that recognized gain occurs when you receive boot.  Generally speaking, any taxable gain from a like-kind exchange is deferred unless it involves other property or cash. Losses on like-kind exchanges aren't usually recognized.

As far as your third question, you will report the two rentals in 2025, so you could separate the assets for 2025, using the information provided.

@Stefan_from_CV