Important 1031 information regarding IRS extended deadlines

Important 1031 information regarding IRS extended deadlines

Great News!

On March 9, 2020, the IRS issued Notice 2020-23, extending a variety of deadlines, including 1031 deadlines.  Although the Notice is confusing, because it is not written like the typical Disaster Relief Notices, this Notice extends any 45-day or 180-day deadline that occurs between April 1 and July 14, to July 15, 2020. 

We are working with other real estate professionals to convince the IRS to change the start date from April 1st to March 13th so that the extensions apply to more taxpayers.

Please note that this is different from the usual disaster extension that provides for an extra 120 days.

Here are two examples to illustrate the current extension.

• Example 1: Exchange began April 1, 2020. 45th day is May 16, which would be extended to July 15, 2020. Taxpayer must still close on replacement property by Sept 28, which is the 180th day; because Sept 28 is after the last day of the disaster period (July 15).
• Example 2: Exchange began Dec 31, 2019, 45th day is Feb 14, 2020. ID period is not extended because it is before April 1. The 180th day is June 28, which would be extended to July 15, 2020.

As always, exchangers should speak with their tax advisors to determine if they are eligible for an extension.

This remains a fluid situation and we will provide any clarification or changes that the IRS issues, if any.

IRS Disaster Relief Updates

• COVID-19 Disaster Relief
• IRS Disaster Relief Notices

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