This is excellent. Thank for clearing that up. Apparently the "Line 18: Adjusted basis of property given up" is not just the original adjusted basis before the sale, but also after the sale, including everything thrown into the deal to make it work.
Thank you! Great presentation - I knew what the gain and basis should be, just couldn't get the reporting correctly... a new, fresh angle was what I needed! Tax software was not helpful!
Confused as to what is meant by Fair market value (FMV). How does this relate to the value (HUD1 cost) of when I bought the property, sold the property and replaced with new property (replacement) costs. Costs vs Values is confusing. Example: Bought 5 years ago for 200K, (160K plus 40k land). depreciation to date of sale is 30K. Had a loan on it for 150k. Sold property for 300K, expense of sale of 20k. paid off loan at sale and was left with 145K that went to the intermediary. Bought replacement property at 325K plus 5k for closing costs. For ease, lets say no loan on new property and came cash to close with difference. (330K less 145K intermediary = 185K cash). How would this basic scenario work out with reporting on 8824 re: FMV's ?
Thanks so much for the video. It was very helpful. Question: Is line 16 FMV of property received supposed to be the list price of the property or list price minus closing cost?
Very helpful video! How would you file a 8824 form if you sold one rental single family home and acquired two rental single family homes? And paid some amount of money out of pocket for the second home? Thanks
@@thecpazone Then the previous accumulated depreciation is not subject to the recapture anymore then or should it be tracked separately? thanks for the quick response.
I have a question about Line 15, if the property that the Client gives up had a mortgage would that be included on that line since the other party will be taking over that mortgage?
No, line 15 doesn't report a liability balance assumed by the other party to the exchange. If the person performing the 1031 (the Client) assumed a liability from the other party then it would show up on line 15. Otherwise, the mortgage on the relinquished property reduces the net equity relinquished in the exchange - usually increasing the amount of cash required to close the deal. (e.g. a $200k property w/ a $50k mortgage has only $150,000 equity - if swapped for a $250,000 property then an additional $100k is required to close the deal)
Natalie, that is a great question, but did you vote for Trump, or did you vote for Biden? Considering your question, I'd say you voted for Biden and that makes me sad...STOP VOTING FOR BIDEN!!!
In addition, your general rule 4562 seems off. Looks like you didnt depreciate the relinquished property basis on the existing life left (27.5 less 2.5 yrs of past property) , you left it at 27.5 . should be 104,919 at ~25 yrs left ? The new basis of 100K is 27.5 . ammortization amounts seem off also. pro-rata from 10/31/21 is 61 days. yours seem to calculate different.
You combine the amounts of the 2 properties and report on the same lines. I recommend creating a worksheet for the calculations and then plugging the calculated results into the form.
If you can get both great, otherwise I'd list the later of the two. Be sure to list both addresses in Part I #1 under "Description of like kind property given up" so it's clear there are two
@@shama5664 you report in the tax year the relinquished property was given up. So if the exchange starts in late 2024 and completes in January 2025, the exchange is reported on the 2024 return
This is excellent. Thank for clearing that up. Apparently the "Line 18: Adjusted basis of property given up" is not just the original adjusted basis before the sale, but also after the sale, including everything thrown into the deal to make it work.
I just spent 14 hours trying to figure this out. Then i found your video. You are amazing!
Thank you for the excellent help. The clarification is just amazing!
Excellent video, explained clearly what I need to know, thank you very much!
Thanks for the information.
Sir, sold one property and took multiple properties in exchange
Please do a video on it.
Great Help and example
Thank you! Great presentation - I knew what the gain and basis should be, just couldn't get the reporting correctly... a new, fresh angle was what I needed! Tax software was not helpful!
Thanks for the explanation. Does anyone know if Turbo Tax makes this easy?
Confused as to what is meant by Fair market value (FMV). How does this relate to the value (HUD1 cost) of when I bought the property, sold the property and replaced with new property (replacement) costs. Costs vs Values is confusing. Example: Bought 5 years ago for 200K, (160K plus 40k land). depreciation to date of sale is 30K. Had a loan on it for 150k. Sold property for 300K, expense of sale of 20k. paid off loan at sale and was left with 145K that went to the intermediary. Bought replacement property at 325K plus 5k for closing costs. For ease, lets say no loan on new property and came cash to close with difference. (330K less 145K intermediary = 185K cash). How would this basic scenario work out with reporting on 8824 re: FMV's ?
Thanks so much for the video. It was very helpful. Question: Is line 16 FMV of property received supposed to be the list price of the property or list price minus closing cost?
It’s just the price paid on line 16
Very helpful video! How would you file a 8824 form if you sold one rental single family home and acquired two rental single family homes? And paid some amount of money out of pocket for the second home? Thanks
can you do a video where 1 property sold in exchange for 2 other properties. 2nd closed in January of new year all timing rules have been met.
I have a client that sold one property and xchanging it to multiple properties. Can you do a video of how to report that?
is there a way to get a copy of your power point for reference?
How would you apply depreciation to two rental properties that were gained through 1031 exchange?
Great video! Just one question, do you not carryover the accumulated depreciation from the relinquished property?
You do - the adjusted basis of the old property is your starting point for depreciation on the new property so accum depr is factored in to that
@@thecpazone Then the previous accumulated depreciation is not subject to the recapture anymore then or should it be tracked separately? thanks for the quick response.
@@Freshgrass524 you need to track it separately in the event you sell the property later. Gains and recapture are only deferred with a 1031
I have a question about Line 15, if the property that the Client gives up had a mortgage would that be included on that line since the other party will be taking over that mortgage?
No, line 15 doesn't report a liability balance assumed by the other party to the exchange. If the person performing the 1031 (the Client) assumed a liability from the other party then it would show up on line 15. Otherwise, the mortgage on the relinquished property reduces the net equity relinquished in the exchange - usually increasing the amount of cash required to close the deal. (e.g. a $200k property w/ a $50k mortgage has only $150,000 equity - if swapped for a $250,000 property then an additional $100k is required to close the deal)
@@thecpazone thank you!
Natalie, that is a great question, but did you vote for Trump, or did you vote for Biden? Considering your question, I'd say you voted for Biden and that makes me sad...STOP VOTING FOR BIDEN!!!
How does the closing costs for selling the property given up affect the calculations?
The closing costs reduce the amount of gain that is deferred under the exchange.
Why no one explains 1031 when there are multiple properties involved.
How do you depreciate the second property if you sold vacant land and replaced it with land with a house?
Your basis in the land becomes the starting basis in the new property. That amount needs to be allocated to the land and building
What if you exchanged 1 property for 3 more? Do you fill out a form for each acquired property or all combined ?
You would report on one form and combine
In addition, your general rule 4562 seems off. Looks like you didnt depreciate the relinquished property basis on the existing life left (27.5 less 2.5 yrs of past property) , you left it at 27.5 . should be 104,919 at ~25 yrs left ? The new basis of 100K is 27.5 . ammortization amounts seem off also. pro-rata from 10/31/21 is 61 days. yours seem to calculate different.
Sir, how is an 8824 form filled out when exchanging 2 properties for one? Thank you in advance.
You combine the amounts of the 2 properties and report on the same lines. I recommend creating a worksheet for the calculations and then plugging the calculated results into the form.
Okay thanks. Which date do I use for the acquisition date? Both, if I can squeeze them in?@@thecpazone
If you can get both great, otherwise I'd list the later of the two. Be sure to list both addresses in Part I #1 under "Description of like kind property given up" so it's clear there are two
@@thecpazone what happens when the 2nd property was bought in january of the following year all rules and timing have been met.
@@shama5664 you report in the tax year the relinquished property was given up. So if the exchange starts in late 2024 and completes in January 2025, the exchange is reported on the 2024 return