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How to record sale and purchase of another rental property as 1031 exchange

Just sold rental property using the 1031 exchange and rolled the proceeds into another rental property

Best Answer

  • Tom Young
    Tom Young SuperUser ✭✭✭✭✭
    Accepted Answer
    The nitty-gritty of the accounting entry will depend on the actual transaction, the one that happened in the real world.  So you might want to lay those details out here.
    But assuming the simplest situation - you handed over your mortgage-free property and threw in some cash and got a different property in return - then the accounting would be along the following lines:
    1. Create a new Account in Quicken for the new property
    2. Do a transfer from your checking Account into the new property Account
    3. Transfer the balance in the old property Account to the new property Account
    That removes the old property from your balance sheet, defers the capital gain and results in a new property with the correct basis.
    Of course the actual entry that takes into consideration closing costs, fees, mortgages, etc. would be more complicated.  If you have an outside accountant who does your taxes you might want to lean on them here so that your Quicken file mimics what's being reported in the income tax return.

Answers

  • Tom Young
    Tom Young SuperUser ✭✭✭✭✭
    Accepted Answer
    The nitty-gritty of the accounting entry will depend on the actual transaction, the one that happened in the real world.  So you might want to lay those details out here.
    But assuming the simplest situation - you handed over your mortgage-free property and threw in some cash and got a different property in return - then the accounting would be along the following lines:
    1. Create a new Account in Quicken for the new property
    2. Do a transfer from your checking Account into the new property Account
    3. Transfer the balance in the old property Account to the new property Account
    That removes the old property from your balance sheet, defers the capital gain and results in a new property with the correct basis.
    Of course the actual entry that takes into consideration closing costs, fees, mortgages, etc. would be more complicated.  If you have an outside accountant who does your taxes you might want to lean on them here so that your Quicken file mimics what's being reported in the income tax return.
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