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The two most common situations we encounter that are ineligible for exchange are the sale of a primary residence and “flippers.” Both are excluded for the same reason: In order to be eligible for a 1031 exchange, the relinquished property must have been held for productive in a trade or business or for investment.

The general basis concept is that the new property purchased is the cost of that property minus any gain you deferred in the exchange.

Under IRC §1031, the following properties do not qualify for tax-deferred exchange treatment: Stock in trade or other property held primarily for sale (i.e. property held by a developer, “flipper” or other dealer) Securities or other evidences of indebtedness or interest. Stocks, bonds, or notes.

7:34 18:38 Form 8824 Like Kind Exchange - YouTube YouTube Start of suggested clip End of suggested clip So up in the top. Part 1 covers general information of the exchange. There's a description of theMoreSo up in the top. Part 1 covers general information of the exchange. There's a description of the properties. Involved the various dates involved in the next in the exchange.

The Regulations allow identifying multiple properties. A Taxpayer may identify as many as 3 alternate properties of any value. If more than 3 properties are identified, the value of the 3 cannot exceed 200% of the value of the Relinquished Property unless 95% of the properties identified are acquired.

Under the Tax Cuts and Jobs Act, Section 1031 now applies only to exchanges of real property and not to exchanges of personal or intangible property. An exchange of real property held primarily for sale still does not qualify as a like-kind exchange.

In the simplest situation, where only like-kind property is exchanged and the taxpayer does not recognize any gain or loss, the basis in the surrendered property carries over to the acquired property. Thus, the basis of the property acquired equals the adjusted basis of the property that was given up.