Investors & their agents breathed a collective sigh of relief yesterday as the IRS announced that they would be applying previously granted tax extensions to those participating in a 1031 or other tax deferred exchange. During the initial weeks of the COVID-19 crisis, many expressed concern about not being able to meet the standard timelines due to the SIP order and whether the IRS would or would not grant additional guidance.
See below for more information courtesy of Leonard Spoto of Asset Exchange Company
URGENT 1031 EXCHANGE UPDATE
COVID-19 Timeline Extensions
On Thursday, April 9th the IRS published the IRS published Notice 2020-23 issuing guidance granting deadline relief for 1031 Exchanges. The Notice from the IRS leaves some issues unclear, but we have summarized key facts below:
Who Qualifies?
- Anyone that sold relinquished property and their 45-day deadline falls between April 1st and July 15th.
- Anyone that sold relinquished property and their 180-day deadline falls between April 1st and July 15th.
What is the Extension?
- The 45-day deadline has been extended to July 15th.
- The 180-day deadline has been extended to July 15th.
Examples
- Taxpayer Bob sold his property on March 1st. His day 45 deadline of 4/15 is now extended to 7/15.
- Taxpayer Sue sold her property on October 4, 2019. Her day 180 of 4/1/2020 is now extended to 7/15/2020. She does not have an extension for her day 45.
It is unclear if this will be the final guidance that the IRS issues related to 1031 Exchange deadlines. It leaves some questions unanswered and does not go into as much detail as we would have hoped. We are working diligently for further guidance from the IRS and will update you as soon as we have further clarification.
