What Forms Are Needed for a 1031 Exchange?

The forms needed for a 1031 exchange start with IRS Form 8824, Like-Kind Exchanges, which you attach to your income tax return for the year you transferred the relinquished property. Depending on the transaction, you may also need Schedule D, Form 4797, Form 6252, Form 4868, Form 8288, Form 8960, or Form 6251. Form 8824 is your formal declaration to the IRS that the swap qualifies for tax deferral under Internal Revenue Code Section 1031.¹ Miss a form or a deadline and a deferred exchange can collapse into a fully taxable sale.

Form 8824 Is Required for Every Exchange

Every taxpayer who completes a like-kind exchange files Form 8824. It has three working parts that matter to most filers, plus a Part IV that applies only to certain federal officials.²

Part I collects the exchange information: descriptions of the relinquished and replacement properties, the date you transferred the old property, the date you received the new one, and whether any related parties were involved. Part II handles related-party transactions. If you exchanged with a family member, a corporation you control, or another related party, a two-year holding rule applies; if either side disposes of the received property within two years, the deferred gain becomes taxable in the year of that disposition.³ Part III is the math: realized gain, recognized (taxable) gain, and the adjusted basis carried into the replacement property.

Related-party exchanges also require you to file Form 8824 in each of the two years after the exchange year. On those follow-up filings you complete Parts I and II only, unless an early disposition forces you back into Part III.³

Form 8824 attaches to whatever return your entity files: Form 1040 for individuals, Form 1120 for C corporations, Form 1120-S for S corporations, or Form 1065 for partnerships and multi-member LLCs.³ The filing deadline matches your return’s normal due date, which is April 15 for most individual calendar-year filers.⁴

Where Taxable Gain Flows Next

Any recognized gain that Form 8824 produces has to be reported somewhere else too. Which form depends on how you used the property.

Schedule D for Investment Property

If the exchanged property was purely an investment, recognized gain moves from Form 8824 to Schedule D, Capital Gains and Losses.⁵ It combines with your other capital transactions and, because 1031 property is almost always held over a year, is taxed at long-term capital gains rates.

Form 4797 for Business Property

If you used the property in a trade or business and claimed depreciation, the recognized gain runs through Form 4797, Sales of Business Property, first.⁶ That matters because of depreciation recapture. For real property, the portion attributable to prior depreciation is “unrecaptured Section 1250 gain,” taxed at a maximum federal rate of 25%.⁷ Any gain beyond the recapture amount then flows from Form 4797 to Schedule D at standard long-term capital gains rates.

Form 4868 and the 180-Day Timing Problem

Section 1031 gives you 45 days to identify a replacement property and 180 days to close on it.¹ The 180-day window is capped at your return’s due date, including extensions. Sell a property in November and your 180 days would ordinarily run into the following May, well past April 15. Without an extension, the exchange window gets cut short at the filing deadline.

Form 4868, filed before April 15, extends an individual filing deadline to October 15 and with it the full 180-day exchange window.⁸ The extension does not push back any tax you owe, but it protects the exchange timeline. If you sell in the second half of the year and plan a deferred exchange, filing Form 4868 is effectively mandatory. You then attach Form 8824 to the extended return once the exchange closes.

Form 6252 When Boot Comes as a Note

Boot is anything of value in the exchange that isn’t like-kind real property, and it triggers recognized gain up to the amount of your realized gain. Cash boot and mortgage boot get reported in the year of the exchange on Form 8824. But sometimes boot arrives as a promissory note from the buyer. If the note is not payable on demand and is not readily tradable, the IRS does not treat it as a payment in the exchange year.⁹ You report the gain as payments come in, using Form 6252, Installment Sale Income. The like-kind property received is not counted as a payment in the installment calculation, which spreads the tax over the life of the note.

Forms Triggered by Special Situations

Several additional forms come into play depending on who you are and what you owe.

Form 8288 for Foreign Sellers

When a foreign person disposes of U.S. real property, Section 1445 generally requires the buyer or qualified intermediary to withhold tax and report it on Form 8288.¹⁰ A foreign taxpayer running a 1031 exchange can apply for a withholding certificate on Form 8288-B to reduce or eliminate withholding, but the application has to be filed before closing. Miss it and the withheld cash is unavailable for the exchange, which can create a shortfall that shows up as boot.

Form 8960 for the Net Investment Income Tax

Recognized gain from a 1031 exchange on a passive investment property counts as net investment income. Deferred gain does not. High-income taxpayers subject to the 3.8% NIIT report the recognized portion on Form 8960, which stacks the surtax on top of the applicable capital gains rate.¹¹

Form 6251 for AMT Basis Differences

If the relinquished property carried a different basis for alternative minimum tax purposes (typically from different depreciation methods), that difference carries into the replacement property. When you eventually sell, the AMT gain will differ from the regular tax gain, and Form 6251 captures the adjustment on line 2k.¹²

State Withholding Forms

Many states require withholding on real estate sales by nonresidents, and some offer exemption or waiver paperwork if filed before closing. Rates and rules vary; some states calculate on gross sales price, others on estimated gain. Even a fully deferred federal 1031 exchange can trigger state withholding, and the paperwork is handled at closing under the individual state’s rules. Check the relevant state tax authority well before the transfer date.

Data You Need Before You Start Form 8824

Before filling out Form 8824, gather the following for both properties:

For the relinquished property: original acquisition date, transfer date, and adjusted basis (original purchase price plus capital improvements, minus all depreciation claimed).
For the relinquished property’s fair market value at the time of the exchange, since the IRS uses it to compute total realized gain.
For the replacement property: acquisition date and fair market value at the time of the exchange.
Qualified intermediary details. Nearly every deferred exchange uses a QI, an independent third party who holds sale proceeds and acquires the replacement property, so you don’t have actual or constructive receipt of the funds. You need the QI’s name, address, and Employer Identification Number.³
Exchange expenses. Brokerage commissions, title insurance, escrow fees, transfer taxes, and QI administrative fees first offset boot on line 15 and then reduce gain on line 18. Detailed records of every cost at both closings directly reduce the gain reported.³

File Form 8824 Even When the Exchange Fails

A failed exchange still needs Form 8824. A partial failure just means you received boot; the exchange stays valid and the recognized gain flows to Schedule D or Form 4797 as usual. A complete failure, where you never acquire a replacement property within 180 days or violate another Section 1031 requirement, makes the entire realized gain taxable. Form 8824 still documents the attempted exchange, with realized and recognized gain set to the same figure, and the full amount is then reported as a standard taxable sale on Schedule D or Form 4797.³

One boundary worth naming: Section 1031 applies only to property held for investment or productive use in a trade or business, not to a personal residence.¹ Vacation homes with mixed personal and rental use have their own safe-harbor tests under Revenue Procedure 2008-16 that must be met before Form 8824 is the right filing at all.¹³

1
Office of the Law Revision Counsel. 26 USC 1031 – Exchange of Real Property Held for Productive Use or Investment
2
Internal Revenue Service. About Form 8824, Like-Kind Exchanges
3
Internal Revenue Service. Instructions for Form 8824
4
Internal Revenue Service. When to File
5
Internal Revenue Service. Instructions for Schedule D (Form 1040)
6
Internal Revenue Service. Instructions for Form 4797 – Sales of Business Property
7
Internal Revenue Service. Treasury Decision 8836 – Maximum Capital Gains Rate
8
Internal Revenue Service. Get an Extension to File Your Tax Return
9
Internal Revenue Service. Publication 537 – Installment Sales
10
Internal Revenue Service. About Form 8288, U.S. Withholding Tax Return for Certain Dispositions by Foreign Persons
11
Internal Revenue Service. Instructions for Form 8960 – Net Investment Income Tax
12
Internal Revenue Service. Instructions for Form 6251 – Alternative Minimum Tax
13
Internal Revenue Service. Revenue Procedure 2008-16