On 8824, Line 24, Deferred gain amount. Is this amount the tax I would have owed if I just sold the property and didn't do a 1031 exchange ((ie. capital gain amount + depreciation recapture) - (closing costs and fees))?
No, it is not the amount of tax, it is the amount of actual deferred gain as the line on the form says....
Right so what I would owe would be the tax liability on the deferred gain. This is what my understanding is. However, my CPA calculated the deferred gain to include the higher priced property I exchanged into.
200k original price.
300k sold price
Replacement property $400k
Deferred gain amount is $240k. (I did not include fees and commissions to simplify the numbers.)
If I just sold the property I would have paid taxes on 100k gain and 40k depreciation recapture.
You're correct. In your simplified example, the deferred gain should be $140k