Schedule D

10 — Long-Term Gain or Loss From Like-Kind Exchanges Updated for tax year 2025

What this line means

Long-term capital gain or loss from a Section 1031 like-kind exchange of property held more than one year. In a successful 1031 exchange, the entire gain is deferred. Gain appears on this line only when the exchange is partially taxable — typically because you received boot (cash or non-like-kind property) or the exchange failed to meet the strict IRS deadlines.

Does this apply to you?

  • You completed a 1031 exchange of real estate held more than one year and received cash or other non-qualifying property as part of the deal
  • You attempted a 1031 exchange but failed to identify a replacement property within 45 days or close within 180 days
  • You completed a partial exchange where the replacement property cost less than the relinquished property

Easy to overlook

Strict 45-day and 180-day deadlines are absolute You have exactly 45 days from the sale of your relinquished property to identify potential replacement properties in writing, and 180 days to close. These deadlines cannot be extended for any reason, including weekends, holidays, or natural disasters. Missing either deadline by even one day converts the entire transaction into a taxable sale. 1 [SOURCE: General filing pattern — failed 1031 exchange deadlines]

Related-party exchanges have a two-year holding requirement If you do a 1031 exchange with a related party (family member, controlled entity), both parties must hold the replacement property for at least two years. If either party disposes of their property within two years, the deferred gain becomes taxable retroactively. 2 [SOURCE: IRS Form 8824 instructions]

Watch out for this

Assuming any property swap qualifies for 1031 treatment. Since 2018, only real property qualifies. The properties must be of “like-kind” — but for real estate, this is broadly defined (an apartment building can be exchanged for vacant land). The exchange must use a qualified intermediary; direct swaps between buyer and seller do not qualify.

  • Line 3 — Schedule D — Short-term gain or loss from like-kind exchanges (assets held one year or less)
  • Line 15 — Schedule D — Net long-term capital gain or loss
  • Form 8824 — Like-Kind Exchanges — The form that calculates the recognized gain

Footnotes

  1. IRS Schedule D (Form 1040) Instructions. See also IRS Publication 17, Your Federal Income Tax. https://www.irs.gov/pub/irs-pdf/p17.pdf ↩

  2. IRS Form 8824 Instructions, Like-Kind Exchanges. https://www.irs.gov/instructions/i8824 ↩

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