Which year do I file Form 8824 if the exchange straddles two tax years?

The form follows the sale, not the purchase

The trigger in the Form 8824 instructions is the transfer of the property you gave up. The form then asks for both ends of the exchange on the same page: line 4 for the date you actually transferred your property and line 6 for the date you actually received the replacement, so a straddle simply shows a December date on line 4 and a following-year date on line 6.

Line 5 is the written identification date, which for a late-year sale often falls in January. The instructions add that if you received the replacement within 45 days, you enter the receipt date there instead.

Line 3, the date you originally acquired the relinquished property, is unaffected. The line-by-line walk-through is in how to fill out Form 8824.

The year-one return's due date can cut the 180 days short

Section 1031(a)(3)(B) treats replacement property as not like-kind if it is received after the earlier of 180 days or 'the due date (determined with regard to extension)' of your return for the year of the transfer. Individual returns are due April 15 under section 6072(a), so any sale after mid-October has a day 180 that lands after the unextended due date.

The fix is an extension. Section 6081(a) allows up to six months for most taxpayers, and for individuals the request is Form 4868. The cut-off dates and the partnership and S corporation version are in does a tax extension keep my 180 days.

The practical rule for a straddle: extend, close the purchase, then file the year-one return with a complete Form 8824. A return filed with blank purchase lines invites an amendment and, worse, an argument about when your exchange period ended.

Cash paid out in year two can move to the year-two return

When the intermediary releases leftover cash, or the whole balance after a failed exchange, in the second year, Reg. section 1.1031(k)-1(j)(2) treats the intermediary as not your agent for installment purposes. The payment can then be reported in the year received.

That treatment applies only if you had 'a bona fide intent to enter into a deferred exchange at the beginning of the exchange period,' judged on whether it was reasonable then to expect to acquire replacement property. The Form 8824 instructions for line 22 point you to section 453(f)(6) and Form 6252 when the installment method applies to an exchange.

When year two is the more expensive year, you can elect out of installment reporting. That choice, and what stays in year one regardless, is covered in the 1031 tax-year straddle guide.

Worked example: a November 20, 2026 sale and a March 10, 2027 purchase

Hypothetical; run your own numbers and dates with your CPA. You close the sale of a rental on November 20, 2026. Day 45 is January 4, 2027, and day 180 is May 19, 2027, but your 2026 return is due April 15, 2027, which would end the exchange 34 days early.

You file Form 4868 by April 15, which moves the deadline back to day 180. Your replacement closes March 10, 2027 and $40,000 remains with the intermediary, released on May 20, 2027.

Your 2026 return carries Form 8824 showing 11/20/2026 on line 4, your January identification date on line 5 and 03/10/2027 on line 6. If the installment rules apply, the $40,000 of boot is reported on Form 6252 with your 2027 return, which also starts depreciation on the replacement.

• 2026 return: Form 8824, deferred gain, carryover basis on line 25.
• 2027 return: Form 6252 for the boot, if not elected out, plus depreciation of the replacement.
• No second Form 8824 unless the other party was related to you.

What to give your preparer, and when a trust interest helps

Tell your preparer in January that an exchange is open, so the return is extended rather than filed early. Send both closing statements, the identification notice and the intermediary's final statement once the purchase closes; the list is in documents your CPA needs from the QI.

Late-year sellers who cannot find property before winter often name a Delaware statutory trust as a backup on the 45-day list, because an interest can be acquired quickly once a property falls through. That does not change which return gets Form 8824, but it can keep the boot from appearing on either. See using DSTs as backup properties and Q4 exchanges and tight deadlines.