In short
What to file after a 1031 exchange: Form 8824 line by line, the related-party follow-up years, state forms such as California's FTB 3840, and the DST grantor statement.
If you closed a 1031 exchange last year, your return needs Form 8824 for the year you transferred the relinquished property, any recognized gain carried to Schedule D or Form 4797, and, in some states, a separate information return that repeats every year until the deferred gain is recognized. If you bought a Delaware statutory trust interest, you also need the trustee’s grantor statement before you can finish. If the exchange was still open on April 15, you need an extension on file, not a guess. Here is the February checklist.
Form 8824 goes with the return for the year you sold
The 2025 Instructions for Form 8824 say to file the form with your return for the year you transferred property in a like-kind exchange. Part I asks for the facts the IRS tests first: a description of the property given up and received (lines 1 and 2), the date you originally acquired the relinquished property (line 3), the date you transferred it (line 4), the date you identified replacement property in writing (line 5), and the date you received it (line 6). Lines 5 and 6 are checked against the 45-day and 180-day limits in section 1031(a)(3), so they must match the closing statements and your written identification, not your memory.
Part III is the math: fair market value of any non-like-kind property given up (line 12), cash and net debt relief received (line 15), realized gain (line 19), recognized gain, which is the smaller of line 15 or line 19 (line 20), recapture amounts and deferred gain (lines 21 to 24), and the basis of the like-kind property received, allocated among section 1250 property, section 1245 property and intangibles (line 25). The instructions tell you to carry any recognized gain to Schedule D, Form 4797 or Form 6252, whichever applies; Form 4797 handles depreciation recapture. Our walkthrough of how to fill out Form 8824 uses a worked example, and boot, recapture and Form 4797 covers where each dollar lands.
Two special cases from the instructions. If you made more than one exchange, you may file a summary Form 8824 and attach a statement with the full information for each exchange. If you transferred or received more than one group of like-kind properties, or cash or other property, you do not complete lines 12 through 18 and instead attach your own statement. Exchanges into several DST interests often fall under the first rule; see Form 8824 with multiple properties or DSTs.
Related-party exchanges mean two more years of filing
Part II (lines 7 to 11) asks whether the other party was related to you: a spouse, child, grandchild, parent, grandparent, sibling or a related entity. If yes, the instructions require you to file Form 8824 for the two years following the year of the exchange. Under section 1031(f), if either party disposes of the exchanged property before the date two years after the last transfer, the deferred gain is recognized, unless an exception on line 11 applies: a disposition after death, an involuntary conversion, or a transaction the IRS is satisfied had no tax-avoidance purpose. Calendar those two anniversaries now. The planned page on the related-party section of Form 8824 covers the lines in detail, and who counts as a related party covers the definitions.
State forms: California’s FTB 3840 is the one people miss
Some states require their own filing. California is the clearest example. Under the 2025 Instructions for Form FTB 3840, every taxpayer, resident or not, who exchanges California real property for like-kind property outside California must file FTB 3840 for the year of the exchange and for each subsequent year, generally until the California-sourced deferred gain is recognized on a California return. If you do not file the form and do not file a California return, the Franchise Tax Board may issue a Notice of Proposed Assessment, estimate the deferred gain and assess tax, penalties and interest. The form is annual, so a 2025 exchange out of California generates a filing every year you hold the replacement property.
Check your own state on the state 1031 pages, and read whether a 1031 defers state capital gains tax for the states that claw back deferred gain.
DST investors: wait for the grantor statement
Rev. Rul. 2004-86 treats a properly structured Delaware statutory trust as an investment trust whose beneficial owners are treated, under the grantor trust rules of section 671 and following, as owning undivided interests in the trust’s real estate. That is why a DST interest can be replacement property, and it is also why your tax package is a grantor statement rather than a Schedule K-1. Under Reg. section 1.671-4(b), the trustee must furnish the owner a statement that shows all items of income, deduction and credit of the trust for the year, identifies the payor of each item, and gives the owner the information needed to compute taxable income; the regulation ties the statement’s due date to section 6034A(a). Depending on the reporting method the trustee uses, the trustee may also file Forms 1099 with the IRS. You report your share of rents, interest, depreciation and expenses on your own return.
Do not file before the statement arrives. The pages on DST tax return reporting and DST tax forms explain the depreciation carryover and the multi-state pieces.
If the exchange is still open, extend the return
Under section 1031(a)(3)(B), the exchange period ends at the earlier of 180 days or the due date, including extensions, of your return for the year of transfer. If you sold late in the year and have not closed on replacement property, the period ends April 15 unless an extension is on file, and you cannot extend a return you have already filed. Form 4868 gives an automatic six-month extension. Read how a tax extension keeps your 180 days and the planned page on Form 8824 when an exchange straddles two years.
What to do now
- Pull the exchange agreement, the written identification, both closing statements and the intermediary’s final accounting; the dates on Form 8824 come from these.
- List every related party involved and calendar the two follow-up Form 8824 filings.
- Ask whether your state requires an annual information return like FTB 3840, and whether withholding was taken at closing that you need to claim.
- If you hold a DST, hold the return until the grantor statement arrives; if the exchange is still open, file Form 4868 before you file anything else.
For what to do after filing, see the post-exchange checklist.
