Cashing out a 1031 Property ??

[David C.]

I have been trying to find some definitive information regarding the following scenario:

In the event of the sale of a property that has been purchased using 1031 funds, how is a cost basis figured out ? I have found some conflicting information.  

Thanks!

[Dave Foster]

@David C. Start with the form 8824 that your accountant filed for the year you did the 1031.   That transferred the basis from the old property to the new property and the depreciation schedule and added any new depreciable basis.

From that you can tell what you starting basis of the new property was and you can fast forward to your last return to see how much additional depreciation has been taken.  Once you sell that will inform what your gain is that consists of profit and depreciation that will need to be recaptured.