What happens in an exchange?
A like-kind exchange doesn't eliminate taxes; it just pushes them into the future. Say you paid $20,000 for a piece of business or investment real estate and sold it for $30,000 ($30,000 - $20,000 = $10,000 capital gain). Rather than have the $10,000 profit taxed as a capital gain, the like-kind exchange allows the gain to be "passed on" to the new property used for business.
For more information, see this LINK.
Follow these steps:
- With your return open in TurboTax, search for like kind (2 words, no dash) and then click the "Jump to" link at the top of your search results.
- This will take you to Any Other Property Sales? Check the second-to-last box from the bottom for like-kind and section 1031 exchanges and click Continue.
- On the next screen, answer Yes and proceed through the interview questions. We'll fill out Form 8824 for you.
