Yes, you can do one for two properties following the instruction below. You should be able to do use EasyStep. One form 8824 should be sufficient, however keep all of your documentation should you need it later. There are a few details you must be clear on.
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 without paying additional funds for the property received.
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:
An example you have a total purchase value of the two properties received of $500,000 ($275,000 + $225,000) or when dividing each by the total you have the following percentages for the two properties received:
- Rental 1 = 55%
- Rental 2 = 45%
- 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. You should also use the same percentage on this cost.
When you have your TurboTax return open you can use the following steps to update the original assets for the exchange.
- First use the Search (upper right) > Type rentals > Press enter > Click on the Jump to... link
- Or Income & Expenses > Rental Properties and Royalties > Update > Continue to Rental and Royalty Summary > Edit the property
- Scroll to Assets/Depreciation > Click Update > Select 'Edit' next to each asset
- Edit beside each asset > Continue to the Tell Us About This Rental Asset
- Select the checkbox beside 'This item was sold, retired, .... traded in ....etc. > enter the date it was traded (sold/retired)
- Answer the question about whether it was 100% business > Leave the original date it was placed in service (may be purchase date or later depending on your circumstances)
- Continue to the screen 'Confirm Your Prior Depreciation'
- The amount displayed is only for prior years and does not include the current year.
- Continue until you see the current year amount displayed and make a note to add the two amounts together for the Section 1031 like kind exchange.
- This completes the asset portion of the trade.
- Answer 'Yes' to Special Handling.
Next you will complete the like kind exchange, Form 8824 (Section 1031 exchange):
- Use the Search (upper right) > Type like kind > Press enter > Click on the Jump to... link
- Select the checkbox beside 'Any additional like-kind exchanges (section 1031)' > Continue
- Complete the information for the 'Real estate given up' and 'Like-Kind Property Given Up' > Continue
- Name the event > Continue > Complete the information for the 'Like-kind property received'
- If you did not give unlike property in the exchange click 'No' and continue past these screens, if 'Yes' answer the questions.
- Enter any exchange expenses (sales expenses) > Continue to see your deferred gain.
@TerryJamison
[Edited: 03/15/2025 | 1:15 PM PST]
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