How do I fill out Form 8824 for a simple 1031 exchange?

The form belongs to the year you gave up the property, even if you bought in January

The instructions are explicit: "If during the current tax year you transferred property to another party in a like-kind exchange, you must file Form 8824 with your tax return for that year." A December sale with a February purchase reports on the December year's return.

That is also why a late-year sale usually needs an extension. Line 6 asks for the date you received the replacement, and the instructions require it by the earlier of the 180th day or the due date of that return including extensions, so filing the extension protects days you would otherwise lose.

The form is filed even when nothing is taxable. The IRS answer to this exact question ends with: "Even if you recognize no gain or loss, you must report the exchange."

Part I: two descriptions and six dates, three of which decide whether the exchange stands

Lines 1 and 2 take the address and type of each property, and a country if it sits outside the United States. Lines 3 and 4 are the date you originally acquired what you sold and the date you transferred it.

Line 5 is the date of the written identification, and it carries a useful note: if you received the replacement inside the 45-day window, enter the date you received it instead, because you are automatically treated as having met the requirement.

Line 6 is the date you took title. Line 7 asks whether a related party was on either side; a "No" sends you straight to Part III, and a "Yes" opens Part II and a duty to file the form again for each of the two following years.

Lines 15 through 19 build the realized gain, and exchange expenses are subtracted once

Line 15 gathers the cash paid to you, the fair market value of any non-like-kind property you received, and the net liabilities the other party assumed, then reduces that sum, but not below zero, by the exchange expenses you incurred.

Publication 544 draws the line around those expenses: commissions, attorney fees and deed preparation are exchange expenses, while property taxes, rent prorations, security deposits and repairs shown on the same settlement statement are not.

Line 16 is the fair market value of the like-kind property you received and line 17 adds the two. Line 18 takes the adjusted basis of what you gave up, plus the net amount you paid the other party, plus any exchange expenses left over after line 15, and line 19 subtracts line 18 from line 17.

Lines 20 through 25: what is taxed now, what waits, and what your books will carry

Line 20 is the smaller of line 15 or line 19 and not less than zero, so you are taxed on the lesser of what you received and what you earned. Line 21 is ordinary recapture and is carried to Form 4797 line 16.

Line 21 is zero more often than filers expect. Real property placed in service after 1986 and depreciated straight line has no additional depreciation for §1250 purposes, so unless the property held §1245 components the recapture line stays empty and the 25% bracket shows up later on Schedule D instead.

Line 22 is line 20 less line 21, reported on Schedule D or Form 4797; line 23 adds lines 21 and 22; line 24 subtracts line 23 from line 19 to give the deferred gain; and line 25 subtracts line 15 from the sum of lines 18 and 23 to give your basis in the replacement. Where each of those amounts lands on the other forms is worth checking before you file.

A $1,200,000 sale with $128,000 returned: the eleven figures in order

Hypothetical, round numbers. You sell a rental for $1,200,000, its adjusted basis is $380,000, a $500,000 loan is paid off at closing, and $72,000 of commissions, title charges and the intermediary's fee come out of the proceeds. You buy a $1,000,000 replacement with a new $500,000 loan, and $128,000 comes back to you after day 180.

• Line 15: $200,000 of proceeds not reinvested, reduced by $72,000 of exchange expenses, is $128,000, which is also the cheque the intermediary sent.
• Line 16: $1,000,000. Line 17: $1,128,000.
• Line 18: $380,000, because the $500,000 of new debt exactly offsets the $500,000 discharged and no expenses are left over.
• Line 19: $748,000 of realized gain. Line 20: $128,000, the smaller of lines 15 and 19.
• Line 21: zero, a straight-line residential rental with no §1245 components. Line 22: $128,000 to Form 4797. Line 23: $128,000.
• Line 24: $620,000 deferred. Line 25: $380,000, all of it on line 25a as §1250 property.
• Cross-check: the $1,000,000 purchase price less the $620,000 deferred gain is $380,000, the same figure.

Your 1099-S says $1,200,000, and that is not a mistake to fix

Box 2a of Form 1099-S reports gross proceeds, and the instructions for that form define them to include "a note or mortgage paid off at settlement" and any liability the buyer assumes. It is not net cash and it is not gain.

Nothing on the 1099-S knows an exchange happened unless the closing agent reports no gross proceeds and checks box 6, which happens in some swaps but rarely in a deferred exchange funded with cash.

Form 8824 is the reconciliation. The IRS sees $1,200,000 reported and $748,000 of realized gain on line 19, of which $128,000 is recognized and $620,000 deferred, so nothing is missing and no correction is needed.

What is different on the 2025 form

E-filers now get a write-in space on line 19 for "Section 121 exclusion" and its amount, which had only been available on paper, and the instructions warn that line 19 itself is not reduced by the exclusion.

The instructions added guidance for figuring lines 19 and 20, and line 25b now also takes the basis of like-kind §1252, 1254 and 1255 property received. E-filed returns have carried lines 12a, 15a and 25a through 25c on the form itself since the 2024 revision, so no separate sheet goes with them.

The form is not tax advice from anyone but your own adviser; have your CPA or attorney check the figures against both settlement statements before it is filed.