Relinquished property (the one you sold)
Replacement property (the one you bought)
Exchange economics
Realized gain
$0
sale price less basis less costs
Deferred gain
$0
rolled into replacement basis
Boot received (taxable)
$0
cash and net debt relief
Tax saved vs straight sale
$0
at your federal cap-gains rate
New basis in replacement property: loading...
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Qualified Intermediary (QI) required. You CANNOT touch the cash from the sale. The QI must hold the proceeds between sale and replacement purchase. Failing this requirement under Treas. Reg. §1.1031(k)-1(g) blows up the entire exchange and triggers full gain recognition.
Related-party rule (IRC §1031(f)). If the replacement property is acquired from a related party (family member, controlled entity), both parties must hold their properties for at least 2 years or the deferral is recaptured. There is a similar 2-year rule for swaps with related parties.
Cite: IRC §1031 (deferral), §1031(a)(3) (45/180 day rules), §1031(f) (related-party 2-yr rule), TCJA 2017 (real property only).
Form 8824 is required to report a 1031 exchange. Boot is taxed as capital gain (or ordinary, for depreciation recapture under §1250). Personal-use property, primary residence, and stock-in-trade do NOT qualify. Phone 689-331-5723.