I sold a rental property in 2021 and chose to do a 1031 exchange by using the funds to build a new fourplex for rental purposes. I used a 1031 accommodator for this who had the seller amend the purchase contract to a qualified intermediary who had the funds from the sold property. The new construction is estimated to complete and available for rental in 2022.
I understand that new constructions needs to be added to Turbo Tax and Schedule E in the year they are available for the rental. Is this the case for 1031 exchanges as well? What should I do for 2021 taxes. Should I complete like-kind exchange in turbotax and have it generate 8824 form in 2021? Thanks!
form 8824 must be filed in the year of the closing on the relinquished property
what do you mean by accommodator? were they a qualified holder of the proceeds from the sale. if not, you can no longer do a 1031 exchange. transferring the funds from a non-qualified holder to a QI won't change the proper tax results
Thanks for your response. Yes, the holder of the proceeds from the sale is a qualified 1031 intermediary.
I am not sure how to calculate the cost basis of the new property while it is still under construction. Can I use the purchase price of the new construction + construction loan expenses as the cost basis for 2021 taxes, even though the construction is not yet complete and add it as a new rental property in TT?
Here are the rough numbers:
Depreciated Basis of the Relinquished property : 200k
Sale Price: 340k
Closing Costs: 20k
The purchase price of the new construction: 800k
Construction loan closing costs: 20k
Total cost basis of new property: 820k
My understanding is that I should add 820k - 320k + 200k (Depreciated basis) = 700k as the new cost basis for the new property.
Should I follow the steps from https://ttlc.intuit.com/community/taxes/discussion/1031-exchange-for-rental-property-end-to-end-question/00/1210109 and add the new property in TT?
Thanks a lot for your help!