1031 Exchange: sold rental property Dec 2021

[HIPA76TIA]

I would like some help understanding my realized gain #19 and deferred gain #24 and basis of like kind property received #25 so I can fill out Form 8824 correctly.  

I sold my 2 family rental property in NJ on 12/15/2021.   

I originally purchased it in 5/2000 - I lived in it for 2 years than rented it out for 19 years.

Original Sales Price $175,500; sold at $395,500 on 12/15/21.  

Depreciation Taken over the years: $82,519 

Closing Costs: $17,861

Remaining Mortgage existed of $ 147,290 (no idea if that is important)

*I never received any cash proceeds because I used a qualified intermediary 1031 exchange*

Replacement Investment Property Sales Price: $420,540

Closing Costs: $5,274

I will close on my replacement rental property on 2/28/22.  (investment property is in florida)

Thank you ALL so much for any clarification you can provide me.

[tagteam]

You might want to seek professional guidance for the 2021 tax year.

Otherwise, the program will perform all of the calculations for you.

The mortgage balance is not relevant unless the mortgage was assumed. 

If you are going to try and enter this into TurboTax yourself, you should wait until the replacement property closes and, at the very least, do not file until that transaction closes.

From glancing over the figures, your gain should be deferred since the fair market value of the replacement property is greater than that of the relinquished property (i.e., you paid more for the replacement than you received for the relinquished).

Finally, you need to consider which approach you want to use for depreciation going forward.

See https://www.journalofaccountancy.com/issues/2008/nov/depreciatepropertyinlikekindexchangesconsistent...

[HIPA76TIA]

Thank you so much for that advice.  I will wait until we close for replacement property before I enter any numbers with that than.  I will have to read up on the depreciation aspect of it.  (that confuses me a bit)

I thought it would start with same depreciation approach but I realize that might not be good.   Thanks!

[HIPA76TIA]

Hello!

I closed on my replacement property on 2/28/22.  Therefore - I am now confused with the AMT recapture amount - I am not sure where this number should come from or can I get it from last years tax return maybe?

My prior depreciation I can easily find to plug it in but AMT ?

Thank you

[ColeenD3]

If you bought the property in the year 2000, it is very likely that the AMT depreciation and regular depreciation are the same. However, if you are including appliances, they may be subject to an adjustment.

Step 1

Fill out the Form 1040 worksheet to see if it directs you to complete Form 6251 - Line 45 in the AMT section of the Form 1040 instructions. This will determine whether you are subject to AMT. The IRS also provides an AMT Assistant on their website to help identify the need for AMT.

Step 2

Identify the method of depreciation used. If you are using the straight-line method of depreciation, none of your depreciation is subject to the AMT.

Step 3

Recalculate depreciation for the tax year using the straight-line method. The straight-line method of depreciation spreads the cost of the asset, less the residual value of the asset, evenly across each period of the useful life of the asset.

Step 4

Subtract the depreciation calculated using the straight-line method from the depreciation calculated using any other method. This is the amount of depreciation subject to the AMT.

Appendix A contains the MACRS Percentage Table Guide, which is designed to help you locate the correct percentage table to use for depreciating your property. The percentage tables immediately follow the guide.

[HIPA76TIA]

If I decide to pay for a Turbotax expert to do my taxes this year.  Is there any way to request someone who specializes in 1031 Exchange transactions.  I really do not want to do anything incorrectly when it comes to this.  

Plus - so confused on depreciation as well.  I have the amount I have taken throughout the years but I also lived in the property the first 2 years so do I put date acquired as when purchased or when I started to rent it out.

Thank you!

[tagteam]

The acquisition date if you are being asked when you purchased the property.

I am not certain about 1031 "experts", but I am reasonably certain you could get someone who is well versed in preparing returns with exchanges.