IRS Form 8824 Support
Comprehensive support for IRS Form 8824 preparation, ensuring accurate reporting of like-kind exchange transactions and full compliance with federal tax requirements.
The Realized, Recognized, and Deferred Gain Calculation
Form 8824 requires the taxpayer to calculate three distinct figures for every exchange: realized gain, which is the full economic gain on the relinquished property before any deferral; recognized gain, which is the portion of that gain that is currently taxable, typically limited to any boot received; and deferred gain, which is the remaining gain that carries forward into the basis of the replacement property rather than being taxed in the current year. A properly structured exchange with no boot produces recognized gain of zero and full deferral of the realized gain, but even small amounts of cash boot, debt reduction not offset by additional investment, or non-like-kind property received can create recognized gain that must be reported and taxed in the year of the exchange. We work with Washington DC investors' tax preparers to ensure these three figures are calculated correctly from the closing statements and exchange agreement.
Carryover Basis and Its Effect on Future Depreciation
The replacement property's basis for tax purposes is not simply its purchase price; it is calculated by carrying over the adjusted basis of the relinquished property, adding any additional cash invested, and adjusting for any boot recognized. This carryover basis calculation directly affects the depreciation schedule available on the replacement property going forward, since a lower carryover basis produces lower annual depreciation deductions than the full purchase price would generate on a taxable acquisition. We help compile the historical depreciation records from the relinquished property so the carryover basis calculation on Form 8824, and the resulting depreciation schedule for the replacement property, are accurate from the first year of ownership.
Multi-Asset and Multi-State Exchange Reporting
When an investor identifies and closes on more than one replacement property under the two hundred percent rule or diversifies across several states, Form 8824 reporting becomes more complex, often requiring allocation of the relinquished property's basis and gain across multiple replacement assets in proportion to their relative values. For Washington DC investors acquiring properties in several states, we also flag any state-specific reporting or withholding requirements that may apply in the states where replacement properties are located, separate from the federal Form 8824 filing and the District of Columbia's own conformity with the federal exchange treatment.
Coordinating Documentation Before Tax Season, Not During It
The most common cause of a rushed or error-prone Form 8824 filing is documentation that was not organized until the tax preparer requested it, often months after the exchange closed and key details have become harder to reconstruct. We assemble a complete exchange file, including the exchange agreement, both settlement statements, the identification notice, and any correspondence with the qualified intermediary, immediately after closing, so that when tax season arrives, your CPA or tax attorney has everything needed to complete an accurate Form 8824 without delay.
Amended Returns When New Information Surfaces
Occasionally new information, such as a corrected settlement statement or a previously overlooked exchange expense, comes to light after a Form 8824 has already been filed, requiring an amended return to accurately reflect the transaction. We help Washington DC investors and their tax advisors identify when an amendment is warranted and assemble the supporting documentation needed, since an accurate amended filing is far preferable to leaving an error uncorrected and risking a mismatch that could draw IRS scrutiny during a future audit of either the exchange year or a later year in which the replacement property is eventually sold.
Related Services
Tax Advisor Coordination
Seamless coordination with your CPA, tax attorney, and financial advisors to ensure your 1031 exchange strategy aligns with your overall tax planning and wealth management goals.
Qualified Intermediary Coordination
Secure custodial oversight and wiring discipline that preserves every exchange milestone from contract to closing.
Legal Review
Thorough legal review of exchange documents, purchase agreements, lease abstracts, and title commitments to protect 1031 exchange investors from contractual and compliance risks.
45-Day Identification Period
Strategic guidance for the critical 45-day identification window in your 1031 exchange. We help investors identify qualifying replacement properties before the IRS deadline expires.
Frequently Asked Questions
When is IRS Form 8824 required for a 1031 exchange?
Form 8824 must be filed with your federal tax return for the year in which you transferred the relinquished property, even if the exchange spans two tax years. For example, if you sold your Washington DC property in December 2024 and acquired replacement property in March 2025, Form 8824 is filed with your 2024 tax return. The form must be filed for every like-kind exchange you complete, including exchanges into single tenant NNN retail, multifamily, industrial properties, and DST investments.
What information is needed to complete Form 8824?
Form 8824 requires detailed information including descriptions of both the relinquished and replacement properties, dates of transfer and receipt, the relationship between parties, adjusted basis of the relinquished property, fair market value of the replacement property, any boot received or paid, exchange expenses, realized gain, recognized gain, and the basis of the replacement property. We compile all closing statements, exchange agreements, identification notices, and qualified intermediary documentation to ensure your tax advisor has a complete and accurate record for Washington DC exchange transactions.
What happens if Form 8824 is filed incorrectly?
Incorrect or incomplete Form 8824 filings can trigger IRS scrutiny, audits, and potentially the disqualification of your 1031 exchange. Common errors include incorrect basis calculations, missing property descriptions, inaccurate dates, and failure to report boot. If the IRS disqualifies your exchange, you could owe capital gains taxes, depreciation recapture, and penalties. We work with your tax advisor to ensure every detail is accurately reported for Washington DC exchange transactions, whether you acquired single tenant NNN retail, multifamily, or other replacement property types.