Get IRS 8824 2023-2024

There's no penalty for failure to file if you're due a refund. However, you risk losing a refund altogether if you file a return or otherwise claim a refund after the statute of limitations has expired.

When investors complete a 1031 Exchange, they are required to report the details to the IRS on IRS Form 8824. Failure to file this form and correctly report the required information can result in a reversal of your 1031 Exchange and potentially trigger penalties.

In fact, failure to file Form 8824 might treat your like-kind exchange as a sales transaction subject to all kinds of taxes. So, in answer to what happens if you don't file Form 8824, the answer could be “nothing.” Or it could be non-recognition of your 1031 exchange, complete with expensive consequences.

Other Forms You May Have To File For exchanges of real property used in a trade or business (and other noncapital assets), enter the gain or (loss) from Form 8824, if any, on Form 4797, line 5 or line 16.

If during the current tax year you transferred property to another party in a like-kind exchange, you must file Form 8824 with your tax return for that year.

Purpose of Form Use Parts I, II, and III of Form 8824 to report each exchange of business or investment real property for real property of a like kind. Form 8824 figures the amount of gain deferred as a result of a like-kind exchange.

IRC Section 1031 provides an exception and allows you to postpone paying tax on the gain if you reinvest the proceeds in similar property as part of a qualifying like-kind exchange. Gain deferred in a like-kind exchange under IRC Section 1031 is tax-deferred, but it is not tax-free.

Financial Consequences Immediate Tax Burden: When an investor fails to complete a 1031 exchange by the year-end deadline, the most direct impact is the incurrence of a significant tax liability. This scenario arises because the cornerstone of a 1031 exchange is the deferral of capital gains taxes.