1

In California, let's say I sell a property for $100,000, paying a $6000 commission.

Is my 1031 exchange amount $100,000 or $94,000?

2
  • that's a great question! – Fattie Jan 30 at 15:41
  • aren't comissions included in gains and loss of property? not sure if real estate is different. watching. – CQM Feb 6 at 21:45
1
+100

Your basis gets bumped up to account for that commission. Report it on line 18 of IRS form 8824 as the sum of your expenses and your basis. Instructions for form 8824 are here.

Line 18. Include on line 18 the sum of:

  • The adjusted basis of the like-kind property you gave up;
  • Exchange expenses ...
  • ...
4
  • What do you mean by basis gets "bumped up?" – Matthew Feb 9 at 2:30
  • I mean "increased" – Orange Coast- reinstate Monica Feb 9 at 6:00
  • Ok so I need to still spend the full $100k amount but my capital basis is increased whenever I eventually sell? – Matthew Feb 9 at 15:05
  • Could you work on lines 15 through 18 of form 8824 and let us know your thinking? This would require the details of the property received in exchange, as well as your adjusted basis on the property that you exchanged. – Orange Coast- reinstate Monica Feb 10 at 7:46

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.