Filling out Form 8824 for my first 1031 exchange - can I still use my free tax software?

You can still use your free tax software for most of your return, but you'll need to handle the Form 8824 separately. Since you have a straightforward 1031 exchange with no boot, it shouldn't be too complex. The issue is that when you e-file, all forms need to be filed electronically together as one package. You can't e-file your return and then mail Form 8824 separately - the IRS systems don't work that way and your return would be considered incomplete. You have two options: Either print and mail your entire return with Form 8824 attached (this means completing your return on freetaxusa but selecting the paper filing option), or use tax software that supports Form 8824 and e-file everything together. Several mid-tier paid tax software options support 1031 exchanges. While you don't necessarily need an accountant for a straightforward exchange with no boot, having professional guidance your first time through a 1031 exchange can be valuable since mistakes could potentially trigger tax consequences you're trying to avoid.

After struggling with my own 1031 exchange paperwork last year, I found this incredible tool that saved me so much time and stress - https://taxr.ai has this feature where you can upload your exchange documents and it creates a draft Form 8824 for you! It literally walks you through each section and explains what information goes where. I was skeptical at first since I'd never heard of it, but it correctly identified all the key dates, property values, and even calculated my basis properly. It's much more affordable than hiring an accountant, and once it helped me complete the 8824, I just printed everything and mailed it in with my return that I prepared on a free site. The best part was that it explained everything in plain English instead of confusing tax jargon. It even gives you warnings if something looks potentially incorrect in your exchange.

Just wanted to follow up about my experience with taxr.ai that someone mentioned above. After being skeptical, I decided to give it a try for my rental property exchange this year. Holy crap, you guys, this thing is legit! I was completely stuck on how to calculate my adjusted basis (I had made improvements to the property I sold), and the tool walked me through exactly what qualified and how to document it. It identified a small amount of boot I didn't realize I had from mortgage differences, which could have been a problem if I'd missed it. The form completion was super straightforward - took maybe 20 minutes to input everything and get a properly formatted 8824. I ended up printing my whole return and mailing it in with the 8824 attached, and just got confirmation that everything was processed correctly. No accountant needed after all!

If you're having trouble reaching the IRS to verify how to properly file your 1031 exchange forms, I'd recommend checking out https://claimyr.com - they got me through to an actual IRS agent in about 15 minutes when I was trying to get clarification about my 1031 paperwork. You can see how it works here: https://youtu.be/_kiP6q8DX5c I had been trying for DAYS to get through the normal IRS phone line and kept getting disconnected or told to call back later. I was ready to just guess and hope for the best with my 8824 form, which probably would've been a disaster. The IRS agent I finally spoke to explained that I had been filling out the form incorrectly and would have triggered an automatic review. It's crazy how hard it is to reach an actual person at the IRS these days when you have legitimate questions about somewhat complex forms like this.

Ok I have to eat my words about the Claimyr thing. After posting that skeptical comment yesterday, I decided to try it for myself since I've been trying to get clarification on a completely different 1031 issue that's been giving me anxiety for weeks. Not only did I actually get through to an IRS agent, but it happened in about 20 minutes. The agent was able to confirm that I CAN in fact amend a previous year's return to properly document a 1031 exchange I did in 2023 that my accountant screwed up. This is after my regular accountant told me it wasn't possible and I'd have to pay a huge tax bill! I'm still in shock that it actually worked. Would have saved me weeks of stress if I'd known about this earlier. The IRS agent even gave me her direct extension for if I have follow-up questions.

Just chiming in as someone who does their own taxes and has done a couple 1031 exchanges - if you have no boot, Form 8824 is actually pretty straightforward. I've done it by hand before. The important parts are: - Accurately describing both properties - Documenting the timeline to show you met the 45/180 day requirements - Correctly calculating your basis in the new property If you mess up the form but the facts of your exchange are legit (which it sounds like yours are), the worst that happens is the IRS might ask for clarification. They're not going to deny your 1031 exchange benefits over paperwork errors if the actual exchange was valid.

Question about depreciation on these 1031 properties - do you have to continue the same depreciation schedule from the old property or can you start fresh with the new one? I've been told different things by different people.

Nina, you're absolutely right to be concerned about handling this correctly! I went through a similar situation with my first 1031 exchange two years ago and here's what I learned: The paper filing route is actually pretty straightforward if you're comfortable with your regular tax software. I used FreeTaxUSA just like you, completed everything normally, then selected the "print and mail" option instead of e-filing. The Form 8824 gets attached to your printed return - just make sure you sign everything and mail it certified mail so you have proof it was received. For a no-boot exchange like yours, Form 8824 is manageable if you have good records. The key information you'll need: exact dates of the sale and purchase, property addresses, sale price of the old property ($285k), purchase price of the new property ($310k), your adjusted basis in the old property (original cost plus improvements minus depreciation), and details about your qualified intermediary. Since you're dealing with rental property, don't forget you'll also need to handle the depreciation recapture calculations when you eventually sell the replacement property down the road. Keep excellent records of everything - you'll thank yourself later! The $25k difference between your sale and purchase prices shows you put additional cash in, which is good - no boot to worry about on the tax side.