Form 8824 Instructions 2025: Like-Kind Exchanges by Line

Updated October 7, 2026. Quick answer: Form 8824 reports each like-kind exchange of business or investment real property and figures how much gain is deferred. Part I describes the exchange and its dates, Part II covers related party exchanges, and Part III works out realized gain, recognized gain and the basis of what you received. Since 2018 only real property qualifies. The form is filed with the return for the year the property was transferred.

Related reading on this site: IRS Publication 544.

Sales of business property (Form 4797), passive activity losses (Form 8582) and depreciation (Form 4562) for 2025, read line by line: Form 4797 lines 13 to 18, Form 4797 lines 19 to 24 and Form 4797 lines 25 to 32.

Schedule D and Schedule E (Form 1040) for 2025, read line by line: Schedule D lines 4 and 5 and Schedule D lines 11 and 12.

More IRS forms and schedules, read line by line: Form 8275 instructions.

What Form 8824 does and what qualifies

The instructions state the purpose in one sentence: “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.”

The scope of the rule changed after 2017: “For 2018 and later years, section 1031 like-kind exchange treatment applies only to exchanges of real property held for use in a trade or business or for investment, other than real property held primarily for sale.” Personal property such as equipment no longer fits on the form. The instructions also draw a geographic line: “real property in the United States and real property outside the United States aren’t like-kind properties.”

The basic tax result is described this way: “Generally, if you exchange business or investment real property solely for business or investment real property of a like kind, section 1031 provides that no gain or loss is recognized.” “If, as part of the exchange, you also receive other (non-like-kind) property or money, gain is recognized to the extent of the other property and money received, but a loss isn’t recognized.” Gain on a sale of the same property is covered on the depreciation recapture page.

Part I: lines 1 to 7, dates and the 45 and 180 day clocks

Lines 1 and 2 describe the property given up and the property received. “Generally, only real property should be described on lines 1 and 2, including intangible property that is treated as real property for like-kind exchange purposes.” Lines 3 and 4 are the original acquisition date and the date you transferred your property. Lines 5 and 6 matter for a deferred exchange, where the replacement property arrives after the property given up is transferred.

“The replacement property for the exchange must be identified within 45 days after the property being given up is transferred. The replacement property must be received within 180 days, or by the due date of your tax return (including extensions), whichever is earlier.” On line 5, the instructions require that the property be “designated in writing as replacement property either in a document you signed or in a written agreement signed by all parties to the exchange.” Line 6 is the date of actual receipt.

The dates above are an illustration, not IRS figures. The 180 day date applies only when it falls before the return due date including extensions, as the sentence quoted above says. Line 7 asks whether the exchange was made with a related party, which leads to Part II.

Qualified intermediaries

Most deferred exchanges use a middleman. The instructions say “If you make a deferred exchange using a qualified intermediary (QI), the transfer of the property given up and receipt of like-kind property is treated as a like-kind exchange.” They add a warning about timing: “If you fail to meet the timing requirements because of the QI, your transaction won’t qualify as a deferred exchange and any gain may be taxable in the year you transferred the property.”

Not everyone can serve in that role. “Related parties and agents of the taxpayer aren’t eligible to be QIs”, and the instructions refer to Pub. 544 for the details of QIs and safe harbors. If you sold instead of exchanging, the report goes through Form 8949 and Schedule D.

Part II: related party exchanges and the 2 year rule

“A related party includes your spouse, child, grandchild, parent, grandparent, brother, sister, or a related corporation, S corporation, partnership, trust, estate, or tax-exempt organization.” The rule reaches indirect dealings too. Exchanges made through an intermediary such as a QI count, and so do exchanges made by a disregarded entity that you or a related party owned.

There are two consequences. First, “An exchange structured to avoid the related party rules isn’t a like-kind exchange. Don’t report it on Form 8824.” Second, a disposition within the holding period undoes the deferral: if either side disposes of the property “before the date that is 2 years after the last transfer that was part of the exchange, the deferred gain or (loss) from line 24 must be reported on your tax return for the year of disposition”. That is why the form is also filed for the following 2 years: “Also file Form 8824 for the 2 years following the year of a related party exchange.”

Lines 11a to 11c list the exceptions. Line 11a is “The disposition was after the death of either party.” Line 11b is “The disposition was an involuntary conversion, and the threat of conversion occurred after the exchange.” Line 11c is a tax avoidance exception that requires an attached explanation.

Part III: boot, realized gain and recognized gain

Part III is where cash and other non-like-kind property, often called boot, show up. Line 15 adds cash received, the fair market value of other property received, and net liabilities assumed by the other party. “Reduce the sum of the above amounts (but not below zero) by any exchange expenses you incurred.” Line 18 adds the adjusted basis of the property given up, exchange expenses not already used on line 15, and the net amount you paid the other party. Line 19 is line 17 minus line 18, the realized gain.

Recognized gain on line 20 is capped by the boot: “Generally, enter the smaller of line 15 or line 19, but not less than zero.”

The instructions work an example. Taylor gives up an apartment building worth $220,000 with an adjusted basis of $100,000 and an $80,000 mortgage, and receives Finley’s building worth $250,000 with a $150,000 mortgage, plus $40,000 cash. Taylor’s line 15 is only the cash, because the $80,000 of liabilities Finley assumed does not exceed the $150,000 Taylor assumed. The instructions say “Taylor subtracts line 18 from line 17 and enters the $120,000 gain realized on the exchange on line 19. Taylor enters $40,000 on line 20, the lesser of line 15 or line 19.”

Lines 21 to 25: recapture, deferred gain, basis and where the gain goes

Line 21 is for depreciation recapture. “If you disposed of section 1245, 1250, 1252, 1254, or 1255 property (see the instructions for Part III of Form 4797), you may be required to recapture as ordinary income part or all of the realized gain (line 19).” Recognized gain then goes onto another return: “Report a gain from the exchange of property used in a trade or business (and other noncapital assets) on Form 4797, line 5 or line 16. Report a gain from the exchange of capital assets according to the Schedule D (Form 1040) instructions for your tax return.”

Deferred gain is line 19 less line 23. “If line 19 is a loss, enter it on line 24. Otherwise, subtract the amount on line 23 from the amount on line 19 and enter the result.” In the Taylor example with no recapture, line 23 equals the $40,000 recognized gain, so the deferred gain on line 24 is $120,000 minus $40,000, or $80,000. That subtraction is computed here, not printed in that part of the instructions.

Line 25 is the new basis: “The amount on line 25 is your basis in the like-kind property you received in the exchange. Your basis in other property (non-like-kind) received in the exchange, if any, is its FMV.” Lines 25a to 25c split that basis among section 1250 property, section 1245 and similar property, and intangible property. More on carrying recapture and installment issues is on the installment sale recapture page.

Which revision applies

The edition read for this page is the 2025 Form 8824 and its instructions, dated December 2, 2025, which are the revision irs.gov served when they were read on 2026-10-07. A later revision can renumber lines, so check the line numbers against the form you are filling in. “For the latest information about developments related to Form 8824 and its instructions, such as legislation enacted after they were published, go to IRS.gov/Form8824.”

Other filing points from the instructions: if you made more than one exchange, “you can file a summary on one Form 8824 and attach your own statement showing all the information requested on Form 8824 for each exchange.” Part IV of the form is separate and is for certain federal officials making a conflict-of-interest sale election.

Common mistakes

• Including personal property or a home used solely as a residence. The instructions say section 1031 does not apply if the property given up was used solely as your personal residence at the time of the exchange.
• Treating the 45 and 180 day dates as flexible. The replacement property must be identified within 45 days and received by the earlier of 180 days or the return due date including extensions.
• Reporting a related party exchange that was structured to avoid the related party rules. The instructions say not to report it on Form 8824 and to report the disposition as if it were a sale.

Related: depreciation recapture in the year of sale, selling a rental with tenants, Schedule D (Form 1040), and Form 8949.

Sources

• Instructions for Form 8824 (2025): https://www.irs.gov/pub/irs-pdf/i8824.pdf
• Form 8824 (2025): https://www.irs.gov/pub/irs-pdf/f8824.pdf

Read from the IRS documents linked above on October 7, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the account provider or the IRS is the right place to confirm anything consequential.