1031 Exchange Questions Answered
One real question per page, answered directly first, then explained with the rules, numbers and forms behind the answer.
Each page here owns one question people ask before, during or after an exchange, and opens with the answer. The explanation that follows carries the rule, the number and the form behind it, with the sources listed at the end.
Where a question turns on your state, the state pages carry those rules; where it turns on the property you are selling, the property-type pages do.
After the exchange
Are qualified intermediary fees and exchange costs deductible or added to basis?
Exchange expenses are never a current deduction. Form 8824 line 15 uses them to absorb boot, then line 18 rolls the rest into your replacement basis.
ReadCan I gift or transfer my replacement property to an LLC or trust after a 1031?
A disregarded LLC or revocable trust keeps the same taxpayer and is safe. A gift is judged on intent: Click failed at seven months, Wagensen survived at nine.
ReadCan I renovate, subdivide or add value to my replacement property after closing?
Yes. Improvements you fund yourself add to basis and depreciate separately. Subdividing and selling lots is the risk: it can turn the gain into ordinary income.
ReadCan I take bonus depreciation or do cost segregation on my replacement property?
Yes to the study, partly to the bonus: on a used building only the excess basis qualifies, at 100% for property acquired after January 19, 2025.
ReadCan I use exchange funds for repairs after closing on the replacement property?
No. Once the deed is yours, money the intermediary releases for work is cash boot. Only an improvement exchange counts construction, and the cap is 180 days.
ReadHow do I calculate my basis in the replacement property after a 1031 exchange?
Start with the old property's adjusted basis, subtract cash and debt you shed, add cash and debt you took on, then add any gain you recognized.
ReadHow do I fill out Form 8824 for a simple 1031 exchange?
Six dates in Part I, then eleven figures in Part III. Line 19 is the gain, line 20 the taxable part, line 24 the deferral and line 25 your new basis.
ReadHow do I report a 1031 exchange with multiple properties or DSTs on Form 8824?
One exchange gets one Form 8824 however many properties are on either side; the basis on line 25 is then split by relative fair market value.
ReadHow is the replacement property depreciated after a 1031 exchange?
On two schedules. The carried-over basis finishes the old property's recovery period, and only the trade-up amount starts a fresh 27.5 or 39 years.
ReadHow long must I hold my replacement property before selling or exchanging again?
No statute sets a minimum. Intent decides it, and the Tax Court accepted a transfer at nine months in Wagensen while rejecting one at seven in Click.
ReadWhat is the IRS audit risk on a 1031 exchange, and what records should I keep?
Individual returns for tax year 2021 were examined at 0.3 percent, 0.9 percent above $1 million. Filing Form 8824 is not itself a selection factor.
ReadWhat tax do I owe when I finally sell a 1031 replacement property for cash?
Every deferred dollar arrives at once: sale price less your low carried basis, taxed at up to 25% on all past depreciation and 0/15/20% plus 3.8% on the rest.
ReadWhere do boot and recapture from a 1031 exchange go on Form 4797 and Schedule D?
Form 8824 line 21 goes to Form 4797 line 16, line 22 to line 5 or Schedule D, and Part III of Form 4797 stays blank for the exchange itself.
ReadBoot, debt and cash
Are tenant security deposits and rent prorations boot in a 1031 exchange?
Prorated rent is not boot; the regulation names it. A deposit credit is, unless you replace it with your own cash, because it is not debt you can offset.
ReadCan I add my own cash to the exchange to buy a bigger property?
Yes, and cash you bring to closing is never boot. It cancels debt relief dollar for dollar and becomes excess basis you depreciate as new property.
ReadCan I carry a note for my buyer and still do a 1031 exchange?
Yes, if the note names your qualified intermediary as payee at closing. Made payable to you, it is boot the moment it is signed, reported on Form 6252.
ReadCan I get a mortgage on the replacement using exchange funds as the down payment?
Yes. Fannie Mae's Selling Guide accepts like-kind exchange assets for the down payment, if the intermediary wires them to escrow and vesting never changes.
ReadCan I pay off a HELOC, credit cards or other debts with exchange funds?
A HELOC secured by the property you are selling is netted as liability relief; credit cards and loans on other property paid from proceeds are cash boot.
ReadCan I take my original down payment out tax-free in a 1031 exchange?
No. The first dollars out of an exchange are gain, not a return of your down payment, and they are taxed up to the full amount of your realized gain.
ReadCan I use exchange proceeds to pay down the mortgage on a property I already own?
No. Every dollar your QI wires to a lender on a building you already hold is cash boot, because you receive no like-kind property for it.
ReadCan the buyer assume my low-rate mortgage in a 1031 exchange?
Yes, but an assumed balance is money received under Reg. §1.1031(b)-1(c). Replace it with new debt or your own cash or it is taxable mortgage boot.
ReadDo I have to reinvest the whole sale price, or just my gain?
You replace the net sale price, not the gain: buy at or above it, put every dollar of equity in, and cover the debt you shed with new debt or your own cash.
ReadDo I have to replace my mortgage in a 1031, or can I add cash instead?
You never have to borrow again: outside cash offsets the debt you shed dollar for dollar, but net proceeds alone cannot cover both the equity and the loan.
ReadDo loan fees, points and rate buy-downs paid from exchange funds count as boot?
Treat them as boot. Points are prepaid interest under §461(g) and loan costs attach to the debt, not the building, so they buy you no like-kind property.
ReadDoes more debt on the replacement offset the cash I take out?
No. Liabilities you take on never offset cash you receive, so keeping $100,000 while borrowing $100,000 more still leaves $100,000 of recognized gain.
ReadIs boot taxed as depreciation recapture or capital gain first?
Recapture first. Ordinary §1245 income comes off the top of the boot and can exceed it, the 25% §1250 slot fills next, and 15% or 20% gain comes last.
ReadIs the furniture in a furnished rental boot in a 1031 exchange?
Yes. Only real property has been like-kind since 2018, so furniture is boot at its value and sells at ordinary rates; the 15% rule saves only the safe harbor.
ReadWhat happens to leftover cash after my 1031 exchange?
Leftover proceeds are cash boot, taxed in the year you sold and paid out by the intermediary after day 180. A DST on your list can absorb the exact figure.
ReadWhat is boot in a 1031 exchange?
Boot is cash or other non-like-kind value you receive plus net debt relief, and it makes gain taxable up to the lesser of the boot or your realized gain.
ReadWhich closing costs can be paid from exchange funds without creating boot?
Commissions, title and escrow fees, transfer taxes and the QI fee. They cut Form 8824 line 15 dollar for dollar; lender charges and prorations do not.
ReadDeadlines and identification
Are the 45 days part of the 180 days, or do I get 225 days?
The 45 days sit inside the 180. Both run from your sale closing, so naming properties on day 45 leaves 135 days to close, never a separate 180.
ReadCan I cancel my 1031 exchange midway and get my money back?
Cancel before your sale closes, after day 45 with nothing identified, or after day 180; in between the QI must hold the funds. No IRS penalty, only the tax.
ReadCan I change my identification list after day 45?
No. The list locks at midnight on day 45; until then you can revoke and re-identify in writing as often as you like, and after it only named property closes.
ReadCan I get an extension on my 45-day or 180-day deadline?
No hardship extension exists. Only an IRS disaster release under Rev. Proc. 2018-58 §17 moves a 45- or 180-day deadline, by 120 days or the release's date.
ReadCan I get my money back if I don't identify anything by day 45?
Yes. With an empty list at midnight on day 45, your exchange agreement can pay you from day 46, and the gain is taxed in the year the money reaches you.
ReadCan my exchange partly succeed if one replacement closes and another doesn't?
Yes. Under the three-property or 200% rule the property you close keeps its deferral; unspent cash and unreplaced debt are boot taxed up to your realized gain.
ReadDo I need to file a tax extension to keep my full 180 days?
Yes, if your 2026 sale closed after October 17: Form 4868 for individuals, or after September 16 with Form 7004 for calendar-year partnerships and S corps.
ReadDo the 45-day and 180-day 1031 deadlines include weekends and holidays?
Yes. Both periods are calendar days ending at midnight on day 45 and day 180 (Reg. §1.1031(k)-1(b)(2)); a Saturday or holiday deadline does not roll to Monday.
ReadDoes a lender or seller delay extend my 1031 deadline?
No. Underwriting, appraisal, title and seller delays never move day 180. The only lender in the deadline rules is one stopped by a declared disaster.
ReadHow do I properly identify replacement property, and is an email to my agent enough?
A valid 1031 identification is a signed written document delivered by midnight of day 45 to the QI or seller; an email to your own agent or attorney does not count.
ReadHow many replacement properties can I identify in a 1031 exchange?
Three properties of any value, or any number whose combined value stays within 200% of what you sold; break both limits and only the 95% rule can save the list.
ReadIf I close on the replacement within 45 days, do I still have to identify it?
No separate letter is needed for property you receive before day 45 ends, but it uses one of your three slots and Form 8824 line 5 takes the closing date.
ReadIs there a penalty for a failed 1031 exchange?
No. A failed 1031 is taxed as a plain sale: up to 25% on depreciation, 15% or 20% on the rest, 3.8% NIIT. The only penalty risk is underpaid estimated tax.
ReadMy identified replacement property fell through after day 45. What can I do?
You can close on any other name already on your list or revive the dead deal, but nothing can be added, and the funds stay with your QI until day 180.
ReadShould I buy a property I don't want just to finish my 1031 exchange?
Usually no: overpaying 10% on a $1,500,000 replacement erases a $150,000 deferral on day one. A DST placeholder, a partial exchange or an empty list is better.
ReadWhen does the 45-day clock start: closing, funding or recording?
Day zero is the date the benefits and burdens of ownership pass, normally the day escrow funds and releases your deed, never the day the county records it.
ReadWhen does the QI release my funds if my exchange fails, and when is the tax due?
The QI may release funds after day 45 with nothing identified, on day 181, or once a written contingency ends every deal; tax falls in the payout year.
ReadTax on the sale
Can a charitable remainder trust replace a 1031 exchange?
Only if you mean to give the building away. A CRT sells untaxed and pays you 5% to 50% a year, but at least 10% must reach charity and heirs get nothing.
ReadCan I owe recapture in a 1031 exchange even if I take no cash?
Yes. Section 1245(b)(4) caps recapture at boot plus the value of non-1245 property bought, so a cost-segregated building can bill you at zero cash.
ReadCan I use my suspended passive losses when I do a 1031 exchange?
Not in full. Section 469(g) releases them only where all realized gain is recognized, so an exchange keeps them suspended, though boot you take can absorb them.
ReadCan stock losses or other losses offset the gain on my rental sale instead of a 1031?
Yes, up to the gain. §1(h)(1)(E) caps the 25% layer at net capital gain, so carryforwards reach it last, and §469(g) frees suspended passive losses.
ReadDo I owe depreciation recapture if I never claimed depreciation?
Yes. §1016(a)(2) cuts basis by depreciation allowed or allowable, so the 25% layer is taxed anyway. Form 3115 change 7 recovers it before you exchange.
ReadDoes a 1031 exchange defer depreciation recapture?
Yes. The depreciation layer rides along inside your carryover basis and resurfaces at the 25% unrecaptured section 1250 rate on a later cash sale.
ReadDoes a 1031 exchange defer state capital gains tax too?
Yes, because states start from federal taxable income. California and Oregon then require an annual return, FTB 3840 or OR-24, until the replacement sells.
ReadDoes the 3.8% NIIT apply to my rental sale, and does a 1031 defer it?
Usually yes, and yes. The surtax bites once MAGI passes $200,000 single or $250,000 joint, but gain you never recognize under section 1031 is not NII.
ReadHow do I calculate the adjusted basis of my rental before I sell?
Purchase price plus capitalized buying costs plus improvements, minus depreciation allowed or allowable. That subtraction makes your gain exceed your equity.
ReadHow much depreciation recapture will I owe when I sell my rental?
Every dollar of straight-line depreciation comes back as unrecaptured section 1250 gain taxed up to 25%, plus 3.8% NIIT; cost-segregated parts are ordinary.
ReadIs a 1031 exchange tax-free, or does the deferred tax come due later?
Deferred. The IRS says so in six words, and the mechanism is carryover basis, so the bill lands on the first sale you take in cash.
ReadShould I do a 1031 exchange if I'm selling at a loss?
No. §1031(c) refuses the loss, while a taxable sale gives an ordinary §1231 deduction now. Check basis first: depreciation often turns the loss into gain.
ReadWill the state withhold tax at closing even though I'm doing a 1031 exchange?
Usually not, if you certify the exchange before closing. California still makes the QI withhold 3 1/3% on boot above $1,500, or on a failed exchange.
ReadDST and fund questions
Can a DST's loan count as replacement debt in my 1031 exchange?
Yes. You are treated as owning a pro-rata slice of the trust's non-recourse loan, so a dollar of equity in a 50% LTV trust brings a dollar of replacement debt.
ReadCan I 1031 exchange into a bonus depreciation fund?
No: a fund LP or LLC unit is excluded from real property by Reg. 1.1031(a)-3. Its 100% bonus loss offsets gain you recognize; it never defers gain.
ReadCan I buy into a DST before my property sells (reverse exchange into a DST)?
Rarely worth it: the parking safe harbor wants indicia of ownership of property, and Delaware calls a DST interest personal property. Identify it instead.
ReadCan I opt out of a DST's 721 UPREIT roll-up?
Only if your trust agreement gives you an election. Section 721 defers the gain on OP units, but Reg. 1.1031(a)-3 then bars any further 1031 exchange.
ReadCan I park my 1031 money in a DST temporarily and exchange again later?
No: Rev. Rul. 2004-86 bars a DST trustee from selling on your schedule, so the loan and lease fixed before you subscribed decide when you exchange again.
ReadCan I put 1033 condemnation or insurance proceeds into a DST?
Condemnation proceeds fit: 1033(g) applies the like-kind test and gives you three years. Casualty proceeds face the stricter similar-use test and usually fail.
ReadCan I split my exchange between a DST and a property I buy directly?
Yes. Each trust counts as one identified property, so a building plus two trusts fills the three-property rule, and the trust leg absorbs the exact remainder.
ReadCan I use my 1031 exchange funds to invest in an opportunity zone fund?
No: a qualified opportunity fund is a corporation or partnership, not real property. Only the gain goes in, within 180 days, never through your QI.
ReadDo I need a qualified intermediary to exchange into a DST?
Yes. Rev. Rul. 2004-86 itself routes the exchange through a qualified intermediary, and proceeds that reach you first end the exchange by constructive receipt.
ReadHow does a DST pay for a new roof or repairs if it can't raise new capital?
A DST funds repairs from the reserve set at closing, operating cash held back from distributions, lender escrows and the tenant's own lease obligations.
ReadHow much of my exchange or net worth should go into DSTs?
No rule sets a percentage. The exchange equation fixes the dollars you must replace; Reg BI makes your firm test that figure against your liquidity needs.
ReadHow quickly can a DST close if I'm running out of time on my 1031?
A DST can fund in days because its loan and lease were fixed before interests were sold, but day 45 never moves and accreditation proof is the slow step.
ReadIs a DST a security, and who is allowed to sell me one?
Yes. DST interests are sold as Rule 506(b) private placements, so only a registered broker-dealer or investment adviser may recommend one to you.
ReadWhat are the seven deadly sins of a DST?
They are the trustee limits in Rev. Rul. 2004-86. Break one and the trust becomes a partnership, and a partnership interest is not real property under § 1031.
ReadWhat is a springing LLC in a DST, and why does it matter to my next exchange?
A springing LLC lets the DST trustee convert to a partnership with no investor vote. Section 721 keeps the conversion tax-free; it still ends your 1031 exit.
ReadWho controls a DST, and do investors get a vote?
Trustees run the trust under 12 Del. C. § 3806(a). Beneficial owners get no management vote, since a power to direct them would cost the trust its 1031 status.
ReadEntities and title
Can an LLC do a 1031 exchange?
Yes, but classification decides who exchanges. A one-owner LLC is disregarded; an LLC with two members is a partnership that must sell and buy itself.
ReadCan co-owners each take their own DST interest after one sale?
Yes when title is tenancy in common: each co-owner is a separate taxpayer with its own exchange file, its own identification and its own DST subscription.
ReadCan I 1031 from my personal name into an LLC?
Yes into a new LLC you alone own, because it is disregarded. No into a multi-member LLC or partnership, which is a different taxpayer entirely.
ReadCan I 1031 into a DST if my property is held in an LLC or trust?
Yes. The DST subscriber must be the taxpayer that sold: you after a disregarded LLC or revocable trust sale, the partnership or the trust itself otherwise.
ReadCan I add or remove my spouse on title to the replacement property?
Take title the way you sold it. A spouse who relinquished nothing is outside your deferral, and §1041 makes retitling later tax-free anyway.
ReadCan I buy my replacement property together with a partner or family member?
Yes, if you take title as tenants in common with stated percentages. Your share of the price and the debt, not the whole purchase, has to clear your sale.
ReadCan I sell in my own name and buy in my revocable trust (or vice versa)?
Yes, either direction. Sections 676(a) and 671 make a revocable trust and its grantor one taxpayer; a non-grantor trust is separate and must buy itself.
ReadCan I use 1031 proceeds to buy out a co-owner's share of another property?
Yes if you take a deeded undivided interest, because co-ownership is real property. Buying the co-owner's LLC or partnership interest instead does not qualify.
ReadCan I use my 1031 proceeds to buy my parents' house from their estate or my siblings?
The estate and your siblings are related parties, so Rev. Rul. 2002-83 can deny the deferral when the seller is paid cash. Get written advice before you sign.
ReadCan two of my LLCs sell separately and buy one replacement together?
Yes if both are single-member LLCs you own, because they are one taxpayer. In a single exchange the 45 and 180 days run from the earliest closing.
ReadWhat qualifies
Can I 1031 exchange a fix-and-flip?
Usually not. Section 1031(a)(2) bars real property held primarily for sale, and the Supreme Court read primarily as of first importance.
ReadCan I 1031 exchange foreign property, or exchange into Puerto Rico, Guam or the USVI?
Section 1031(h) blocks a US-for-foreign swap, but Treasury regulations let a US taxpayer exchange into the USVI, Guam or the Northern Marianas.
ReadCan I 1031 exchange into a property in another state?
Yes. Federal law draws its only line at the national border. But California wants Form FTB 3840 every year, and Oregon wants Form OR-24, until you sell.
ReadCan I 1031 exchange into an auction, foreclosure or REO property?
Yes. Win the parcel before day 45, when receipt is itself identification, or describe it unambiguously — and the bid money must leave the QI, never you.
ReadCan I 1031 exchange my primary residence or second home?
No, not while you live in it. Section 121 excludes $250,000 or $500,000 instead, and a second home qualifies only inside the Rev. Proc. 2008-16 rental test.
ReadCan I 1031 into a syndication, real estate fund or LLC interest?
No. Partnership and LLC interests are not real property under Treas. Reg. 1.1031(a)-3(a)(5). Only DST and tenancy-in-common structures qualify.
ReadCan I buy new construction or a property still being built as my replacement?
Yes, but only what counts as real property under local law on the day you take the deed is like-kind; the rest of your money is boot at day 180.
ReadCan I do a 1031 exchange if I live abroad and own a US rental?
Yes. Your address is irrelevant, but §1031(h) confines you to US real property, and the automatic 15 June filing date changes when your exchange period ends.
ReadCan I exchange one property into several, or several into one?
Yes to both. You may identify three properties or any number within 200% of the sale, and several sales in one exchange run from the earliest closing.
ReadCan I sell a rental house and 1031 into commercial property, land or a DST?
Yes. Like-kind means nature or character, not grade or quality, so any US investment real property trades for any other, DST interests included.
ReadCan I use 1031 money to build on land I already own?
No. Improvements on land you already own are not an exchange, and Rev. Proc. 2004-51 shuts the parking safe harbor for anything you held in the prior 180 days.
ReadDo I need a 1031 exchange if my property was condemned or destroyed?
No. Section 1033 governs instead: you keep the proceeds, there is no intermediary and no day-45 list, and you get at least two years to replace.
ReadHow many times can I do a 1031 exchange?
There is no limit. Section 1031 counts days, not exchanges, but every round carries the old basis forward and the deferred gain keeps compounding.
ReadWhat does not qualify for a 1031 exchange?
Since 1 January 2018 only real property gets through the gate, and real property held primarily for sale is still shut out by the statute itself.
ReadWhat is the minimum gain that makes a 1031 exchange worth the fees?
There is no statutory minimum. The fee break-even is your all-in cost divided by your blended rate: about $10,000 of gain at 25%.
ReadIntermediaries and closing
Can I accept an option payment or early release of earnest money before closing?
Not without tax: cash you receive before closing and keep through it is boot up to your gain (Reg. 1.1031(k)-1(f)). Route option money and deposits to escrow.
ReadCan I do a 1031 exchange on a property I already bought?
No. Rev. Proc. 2004-51 blocks the parking safe harbor for anything you owned in the 180 days before it reaches the accommodation titleholder.
ReadCan I sign a contract on the replacement property before my sale closes?
Yes to the contract, no to the deed. A deferred exchange requires your sale to transfer first, so keep the replacement closing at least one day behind it.
ReadCan I touch, borrow against or pledge my exchange funds during the exchange?
No. Your agreement must give you no right to receive, pledge or borrow the money before the exchange period ends, and firing the intermediary changes nothing.
ReadCan my attorney, CPA or real estate agent be my qualified intermediary?
No, if they worked for you in the two years ending on your closing date. Reg. 1.1031(k)-1(k)(2) treats that person as your agent, and an agent is disqualified.
ReadCan the buyer wire the sale proceeds to the title company, not the QI?
Yes. The buyer funds escrow as usual; what matters is that escrow disburses the net proceeds to the QI's qualified escrow account, never to you or your agent.
ReadDo I earn interest on my exchange funds, and is it taxable?
Only if the exchange agreement says so. Reg. 1.468B-6 treats the funds as loaned to your intermediary unless every dollar of earnings is paid to you.
ReadDo I need an exchange cooperation clause in my sale contract?
Not by law: no statute or regulation requires it. But the clause gives the buyer notice, consent to assign the contract to your QI and a no-cost promise.
ReadDoes a 1031 exchange company give tax advice, or do I need my own CPA?
No. The regulation defines the intermediary as not your agent, and disqualifies anyone who acted as your CPA, attorney or broker in the last two years.
ReadDoes a 1031 exchange delay my closing, and what does the QI do at the closing table?
No. The QI never takes title or replaces escrow: it is assigned into your contract, the deed goes to the buyer, and escrow wires the net proceeds to the QI.
ReadHow do I choose a safe qualified intermediary?
No federal license exists. Judge the account: a $1M fidelity bond or a qualified escrow needing your signature, plus $250,000 of errors and omissions cover.
ReadHow much does a 1031 exchange cost?
A straightforward delayed exchange runs about $750 to $1,500 in intermediary fees. Reverse and improvement structures cost $4,500 to $15,000 plus draw fees.
ReadIs it too late to start a 1031 exchange if I close this week or already closed?
Not if title has not passed: a QI can be assigned into your contract before closing. Once proceeds have reached you or your attorney, it is too late.
ReadWhat disqualifies a 1031 exchange?
Five things do it outright: a right to the cash, a missed day 45 or 180, an over-long identification list, a disqualified intermediary, or ineligible property.
ReadWhat does it mean for my sale when the buyer is doing a 1031 exchange?
Almost nothing changes for you: you consent to an assignment, their intermediary funds the closing, and their 180-day clock usually works in your favour.
ReadWhat happens if my qualified intermediary goes bankrupt or steals my money?
Rev. Proc. 2010-14 lets you report gain only as the trustee pays you, using a gross profit ratio, and claim a section 165 loss for whatever never comes back.
ReadWhat happens if my sale falls through after I set up the exchange?
Nothing, for tax purposes. Both clocks run from the transfer of the relinquished property, so a collapsed closing starts no periods and files no Form 8824.
ReadWhat the QI needs to open my 1031 exchange, and when should I start?
Your QI opens the exchange from the signed sale contract, the closing agent's contact, your exact vesting, TIN and closing date. Engage it before you close.
ReadWho holds the earnest money deposit in a 1031 exchange, and can the QI pay it?
Let escrow hold it. The QI can wire the deposit from exchange funds once assigned into your purchase contract; your own deposit returns as a closing credit.
ReadHolding periods and related parties
Can I buy my replacement property from my parents, sibling or my own company?
Almost never if they take the cash. Rev. Rul. 2002-83 denies deferral, and the IRS has won every appeal, including Teruya and Ocmulgee Fields.
ReadCan I rent my replacement property to my child, my parents or my own business?
Yes, at a fair rental under a written lease. Section 280A(d)(3) keeps a relative's tenancy out of personal use when the home is their principal residence.
ReadCan I sell my property to a family member and still do a 1031 exchange?
Usually yes when your replacement comes from an unrelated seller, because no basis shifts. Form 8824 Part II is still due for the two following years.
ReadCan I sell my rental to my tenant and still do a 1031 exchange?
Yes. An unrelated tenant is an ordinary buyer. The traps are option money and rent credits you already hold, and a tenant who is a relative.
ReadCan my own LLC or a family member lend me the money for the replacement property?
Yes, if the note is bona fide debt. Reg. 1.1031(d)-2 offsets new debt against the mortgage you shed and never asks who the lender is.
ReadHow long do I have to hold a rental before I can 1031 exchange it?
There is no minimum in §1031; the test is what you held it for. The only hard numbers are the 24 months in Rev. Proc. 2008-16 and two years for related parties.
ReadHow long do I have to rent a 1031 replacement before I can move in?
Rev. Proc. 2008-16 gives a 24-month safe harbor: 14 or more fair-rental days and personal use under the greater of 14 days or 10% in each 12-month period.
ReadIf I move into my 1031 replacement, can I later sell it tax-free?
No. Section 121(d)(10) blocks the home-sale exclusion for five years from the exchange closing, and the rental years and all depreciation stay taxable.
ReadWhat is the two-year rule for related-party 1031 exchanges?
Swap property with a relative and a sale by either of you inside two years of the last transfer collapses the deferral, taxing the gain in that later year.
ReadWho counts as a related party in a 1031 exchange?
Section 1031(f)(3) borrows §267(b) and §707(b)(1): spouse, siblings, ancestors, descendants and entities you own over 50% of. In-laws and cousins are out.
ReadHave a sale in motion?
Tell us what you are selling and when it closes. An advisor will send a free proposal with replacement options that fit your deadlines and your state's rules.
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