how to report 2 for1 property like kind exchange in 2 different years

Forum|Forum|2 months ago
May 12, 2026
3 replies
317 views

In 10/2025 property A was sold , did a 1031 exchange and filed an extension of my 2025 tax return because I am not sure what to do with this situation. In 2/2026 property B was sold, did a 1031 exchange and both 1031 exchange was completed on 05/01/2026. My questions are:

1). Do I complete 8824 for my 2025 tax return?

2). If the 2 relinquished properties are exchanged for one property, should 2 properties be reported in one 8824? Should this be reported in 2026 tax return since both of the exchanges were completed in 05/01/2026? or do 8824 for Property A in 2025 tax return and do Property B in 2026 tax return?

In Section 111

$465,000 is the combined total of the relinquished property (A&B)

$500,000 is the replacement property

Please let me know.

Thank you,

Benefit Assist Online

Best answer by M-MTax

@tessie121 wrote:
....Property A and B were relinquished to exchange one property, completed on 05/01/2026

Since the exchange involved two relinquished properties for one replacement property, spanned two tax years, and was initiated in 2025 with one property (Property A) being relinquished in the 2025 tax year, the exchange would be reported on your 2025 tax return.

M-MTax

Level 15

You're going to report both transactions on your 2025 return and filing an extension for your 2025 was the correct thing to do in this instance.

However, it appears as if you may have pushed the windows too far. Did you complete both exchanges within 180 days? The 180-day period ends 180 days after the first sale.

PaulaM

Alumni - Expert

Based on the information you have shared, there is an issue with property A. It appears that property A does not qualify for the exchange as it's outside (slightly) of the 180 day rule. The clock on a multiple property exchange begins with the first property relinquished.

You have indicated a relinquish date of October 2025. Even if on the last day of October, the replacement property would have had to occur by 4/29/26. Working backwards from May 1 replacement property equates to a November 2 relinquish date for property A.

Your Questions:

1. No, since Property A does not appear to qualify for the exchange. Report as capital gain/recapture of depreciation in 2025. It was wise to file an extension, but it does not escape the 180 rule. See below for possible Sec. 453 mitigation to year 2026.

2. Property B is well within the 180 rule and should be reported on your 2026 tax return on Form 8824.

Section 453: Consider possible tax straddle strategy to defer Property A gain to 2026. The rules:

The installment method is only available to taxpayers who make a bona fide attempt to complete the like-kind exchange. It is not available when there is no intention of purchasing replacement property.
The exchange funds must have remained with the Qualified Intermediary past December 31, 2025. Meaning they were not returned to the taxpayer in 2025.
The taxpayer must not have already taken receipt of the funds from the failed exchange.

@tessie121

26 CFR § 1.1031(k)-1, Paragraph (b)(2)(iii)

"If, as part of the same deferred exchange, the taxpayer transfers more than one relinquished property and the relinquished properties are transferred on different dates, the identification period and the exchange period are determined by reference to the earliest date on which any of the properties are transferred."

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tessie121Author

Level 2

I apologize. my mistake, Property A was closed on 11/3/2026 and 1031 exchanged was completed on 05/01/2026 so, it was within the period of 180 days.

M-MTax

Level 15

I have to presume you meant 11/3/2025 and NOT 11/3/2026. In the case of the former, you are within the 180-day period and would report the transactions on your 2025 return.