Form 8824 - Like Kind Exchanges
Generally, if you exchange business or investment property solely for business or investment property of a like kind, no gain or loss is recognized. If, as part of the exchange, you also receive other (not like-kind) property or money, gain is recognized to the extent of the other property and money received, but a loss is not recognized.
Like-kind property. Properties are of like kind if they are of the same nature or character, even if they differ in grade or quality. Personal properties of a like class are like-kind properties. However, livestock of different sexes are not like-kind properties. Also, personal property used predominantly in the United States and personal property used predominantly outside the United States are not like-kind properties. Real properties generally are of like kind, regardless of whether they are improved or unimproved.
Deferred exchanges. A deferred exchange occurs when the property received in the exchange is received after the transfer of the property given up. For a deferred exchange to qualify as like-kind, you must comply with the 45-day written notice and receipt requirements. To comply with the 45-day written notice requirement, the following conditions must be met:
1. The like-kind property you receive in a deferred exchange must 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.
2. The document or agreement must describe the replacement property in a clear and recognizable manner. Real property should be described using a legal
description, street address, or distinguishable name (for example, “Mayfair Apartment Building”).
3. No later than 45 days after the date you transferred the property you gave up:
a. You must send, fax, or hand deliver the document you signed to the person required to transfer the replacement property to you (including a disqualified
person) or to another person involved in the exchange (other than a disqualified person), or
b. All parties to the exchange must sign the written agreement designating the replacement property.
Note. If you received the replacement property before the end of the 45-day period, you automatically are treated as having met the 45-day written notice
requirement. In this case, enter the date you received the replacement property.