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J
JOC
April 12, 2019
Question

1031 Exchange

  • April 12, 2019
  • 2 replies
  • 0 views

Can anybody advise how to manually enter a 1031 exchange.

 

I have a rental property that was sold.  On a balance sheet I track Fixed Assets of Original Cost and Accumulated Depreciation.

 

The property was sold through a Qualified Intermediary and a replacement property purchased.  There is some left over amount (boot) as the replacement property value is less than the sold property value.  There was a capital gain on the sale.  How do I set up the new property to show the gain as an unrealized gain (for tax purposes) and the accumulated depreciation?

2 replies

john-pero
john-pero
April 12, 2019

From the little I know of 1031 exchanges is that the replacement property value MUST be higher than what was sold. I do not think you can step down and postpone gain like you think. Better pay a few more bucks for an attorney versed in the intricacies rather than only relying on the intermediary. https://www.realwealthnetwork.com/learn/how-to-do-a-1031-exchange-rules-definitions/

 

In any event you move the sale, recaptured depreciation, basis, and cash gain into a new asset called 1031 Exchange which is now used toward the new purchase and will be a line item or two on the HUD-1. 

 

I do not play a lawyer on the world wide web but I do think you are headed for trouble having any leftover funds unless you can also spend those into an additional property before the time is up. There is as I see it no restriction on diverting the gain on a single property into the purchase of multiple properties (or I could be wrong)

T
Timbo66
August 19, 2020

I'm no CPA, but I'm pretty sure that you can roll part of the sale proceeds into a new property and take the remainder in cash, but the amount you take is taxable as a capital gain.

S
SmallBusinessSC
February 4, 2024

You can use this 1031 exchange calculator to calculate for capital gains , taxes , adding back accumulated depreciation , mortgage etc

https://simplifyingcalculation.com/smallbusiness/1031-exchange-calculator

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