The short answer
Form 8949 is the IRS form for listing sales and exchanges of capital assets, and Schedule D totals them and figures the tax rates. For real estate, Form 8949 takes property held as a capital asset, such as land held for investment or a main home that must be reported, while rental and business property held more than a year starts on Form 4797. Net section 1231 gain from Form 4797 and recognized gain from a like-kind exchange on Form 8824 then reach Schedule D without passing through Form 8949.
At a glance
| Form 8949 | Capital assets, including land held for investment and a main home sale that must be reported |
|---|---|
| Form 4797 | Rental and business real estate held more than one year, including depreciation recapture in Part III |
| Schedule D | Totals Form 8949, takes net section 1231 gain from Form 4797 and gain from Form 8824 |
| Depreciation | Unrecaptured section 1250 gain is figured on the Schedule D line 19 worksheet and taxed at up to 25% |
Which form a real estate sale starts on depends on how the property was used.
The Form 8949 instructions say to enter all sales of capital assets, real estate included, unless the sale is reported on Form 4797, 4684, 6252, 6781 or 8824. Schedule D then takes the Form 8949 totals plus gain from Part I of Form 4797 and gain or loss from Form 8824. The routing in practice:
- Rental or business property held more than one year: Form 4797, Part I for section 1231 gain and Part III for recapture. A net section 1231 gain is entered on Schedule D as long-term capital gain unless prior-year section 1231 losses must be recaptured first.
- Land held for investment: Form 8949, Part II for long-term holdings, with box F checked when the sale was reported on Form 1099-S rather than Form 1099-B.
- Depreciable property held for investment but not used in a trade or business: generally capital gain on Form 8949 and Schedule D, with any ordinary recapture figured in Part III of Form 4797.
- A main home: Form 8949 only if you cannot exclude all the gain or you received a Form 1099-S, using code H in column (f) for the exclusion.
A worked example shows a rental sale reaching Schedule D without touching Form 8949.
Hypothetical: you sell a duplex you rented out for ten years for $600,000, with $40,000 of selling costs and an adjusted basis of $260,000 after $140,000 of depreciation. The $300,000 gain is reported on Form 4797, not Form 8949, and the net section 1231 gain carries to Schedule D as long-term capital gain.
The part of that gain attributable to the depreciation, up to $140,000 here, is unrecaptured section 1250 gain, figured on the Schedule D worksheet for line 19 and taxed at a rate capped at 25%. Had you sold vacant land held for investment instead, the sale would go on Form 8949, Part II, and its total to Schedule D. These rounded figures only show the pattern; your CPA can run your actual sale.
It bites in exchange years and in years you defer gain into an opportunity fund.
In a section 1031 exchange, Form 8824 computes any recognized gain from boot, and that gain goes to Form 4797 or Schedule D according to the property's use. How boot splits between recapture and capital gain is in boot, recapture, Form 4797 and Schedule D, and the exchange form itself is in how to fill out Form 8824.
Form 8949 comes back in for a rental owner who invests the gain in a qualified opportunity fund. The instructions require two Part II rows for a section 1231 deferral, code O for the Form 4797 amount and code Z for the deferral, alongside Form 8997. For the rates on the gain itself, see capital gains tax on rental property.
Related questions
Does the sale of a rental property go on Form 8949?
Usually not. Rental and business real estate held more than a year is reported on Form 4797, and the net section 1231 gain goes from there to Schedule D; Form 8949 is used for real estate held as a capital asset or for opportunity fund deferral rows.
Where does the Form 1099-S amount go?
On whichever form reports the sale. If that is Form 8949, column (d) takes the proceeds shown on the 1099-S and selling costs not reflected on it are adjusted in column (g) with code E.
Where is depreciation on a sold building taxed?
Depreciation recapture on real property held more than a year is figured as unrecaptured section 1250 gain on the Schedule D line 19 worksheet, taxed at a maximum of 25%, with any ordinary recapture computed in Part III of Form 4797.
Sources
Checked against these publications on September 30, 2026. Rules and figures change; confirm the current version with your CPA or attorney before you act. This page is general information, not tax or legal advice.