The 1031 Exchange is an entirely legal and defensible way to defer capital gains taxes, and has been used thousands of times over the years. The overriding advantage of a 1031 Exchange lies in the ability to move equity from property to property without having to pay the capital gains taxes.A 1031 Exchange addendum functions to serve two primary goals. What are the steps for a basic forward 1031 exchange? Visit our library of important 1031 exchange forms. The pros at Equity Advantage have provided everything you need in easily downloadable PDF files. This provision allows a taxpayer to enter into a contract for the transfer of the. You must report the exchange to the IRS on Form 8824. With your final statement, we will send our workbook explaining how to fill out your Form 8824 properly.