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Level 1

1031 Exchange

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?

Community Champion

1031 Exchange

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.


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)

Level 1

1031 Exchange

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.

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