Legal Disclaimer
NOTICE
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. A transition rule in the new law provides that Section 1031 applies to a qualifying exchange of personal or intangible property if the taxpayer disposed of the exchanged property on or before December 31, 2017, or received replacement property on or before that date.
Thus, effective January 1, 2018, exchanges of machinery, equipment, vehicles, artwork, collectibles, patents and other intellectual property and intangible business assets generally do not qualify for non-recognition of gain or loss as like-kind exchanges. However, certain exchanges of mutual ditch, reservoir or irrigation stock are still eligible for non-recognition of gain or loss as like-kind exchanges.
To report a like-kind exchange, taxpayers must file Form 8824, Like-Kind Exchanges, with their tax return for the year the taxpayer transfers property as part of a like-kind exchange. This form helps a taxpayer figure the amount of gain deferred as a result of the like-kind exchange, as well as the basis of the like-kind property received, if cash or property that isn’t of like kind is involved in the exchange. Form 8824 helps compute the amount of gain the taxpayer must report.
For more information about this and other tax reform changes, visit irs.gov/taxreform
1031 Exchanges now limited to real property, visit: www.irs.gov/newsroom/like-kind-exchanges-now-limited-to-real-property
1031 Exchange fact sheet, visit: www.irs.gov/pub/irs-news/fs-08-18.pdf
1031 Exchange like-kind tax tips, visit: www.irs.gov/businesses/small-businesses-self-employed/like-kind-exchanges-real-estate-tax-tips
Reporting like-kind exchange, CA FTB, visit: www.ftb.ca.gov/file/personal/reporting-like-kind-exchanges.html – www.ftb.ca.gov/forms/2018/18_3840.pdf
LEGAL DISCLAIMER
AMERICAN PROPERTY EXCHANGE SERVICES, LLC – (APX 1031) is a qualified intermediary that specializes in facilitating 1031 exchanges. APX 1031 is not a real estate broker nor a law-firm and does not provide real estate tax, legal or accounting advice. You should consult your own real estate broker, tax, legal and accounting advisor (s) before engaging in any transaction.
The actual deadline for completing an exchange is the earlier of either 180 days from the date on which the Exchanger transfers the relinquished property, or the due date, including extensions filed by the Exchanger, for the Exchanger’s tax return for the year of the transfer of the relinquished property. Consult your tax advisor regarding your tax filing requirement dates.
Washington state law, rcw 19.310.040, requires an exchange facilitator to either maintain a fidelity bond in an amount of not less than one million dollars that protects clients against losses caused by criminal acts of the exchange facilitator, or to hold all client funds in a qualified escrow account or qualified trust that requires your consent for withdrawals. All exchange funds must be deposited in a separately identified account using your tax identification number. You must receive written notification of how your exchange funds have been deposited. Your exchange facilitator is required to provide you with written directions of how to independently verify of the deposit of your exchange funds. Exchange facilitation services are not regulated by any agency of the state of Washington or of the United States government. It is your responsibility to determine that your exchange funds will be held in a safe manner.