Like-Kind Exchanges -Form 8824

In a like-kind exchange, you might exchange property for similar property used solely for business or investment. If so, you might completely or partially defer gain on the exchange. If your gain is tax-deferred, you won’t recognize gain and pay tax until you dispose of the new property.

Properties in a like-kind exchange can differ in grade or quality. However, to be considered a like-kind exchange, the property must be:

  • In the same general asset class
  • Similar in nature
  • Similar in character

Ex: You might give up a rental home in need of repairs in exchange for another rental home that’s well-maintained. If so, it’s a like-kind exchange.

To learn more, see Publication 544: Sales and Other Dispositions of Assets at www.irs.gov.

You don’t have to receive property on the day you give up your property for it to be a like-kind exchange. However, strict rules apply to tax-deferred exchanges. You might want a deferred exchange to qualify as a like-kind exchange. If so, you must comply with the 45-day written notice. The notice identifies the property you and the other person will exchange.

You must receive the replacement property by the earlier of these:

  • 180 days after you gave up your property (not six months, but exactly 180 days)
  • The due date of your federal return for the year you transferred your property. This includes any extensions.

You must prepare Form 8824: Like-Kind Exchanges for all like-kind exchanges.

Special rules apply for:

  • Multi-asset exchanges made with someone you’re related to
  • Property you once used as your personal residence
  • Property you received that will become your personal residence

To learn more about reporting the exchange, see Form 8824 instructions at www.irs.gov.

Related Topics

Related Resources

How Form 1098-C Applies to Your Vehicle Donation Deduction

Donating a qualified vehicle to a charity? Learn how Form 1098-C is used to report the details of your donation and how it affects your deduction.

IRS Letter 2194 – Alternative Minimum Tax Proposal Letter

The IRS thinks you may owe Alternative Minimum Tax (AMT). Learn more about IRS letter 2194 from the tax experts at H&R Block.

Form 1099-B, Proceeds From Broker and Barter Exchange Transactions

If you sold stock, bonds or other securities through a broker or had a barter exchange transaction, you will likely receive a Form 1099-B. Learn more from H&R Block.

IRS Letter 3179C – Refund Offset to Treasury Offset Program – Nontax Debt

All or a portion of your tax refund was taken to pay non-tax debt. Learn more about IRS letter 3179C from the tax experts at H&R Block.