1031 Exchange IRS Extension Deadlines

1031 Exchange IRS Extension Deadlines

1031 Exchange IRS Extension Deadlines.

Taxpayers involved in a 1031 exchange finally have the answer they have been waiting for. On April 9, 2020, the IRS Issued Notice 2020-23, an update to Notice 2020-18, “Additional Relief for Taxpayers Affected by Ongoing Coronavirus Disease 2019 Pandemic.”

Taxpayers currently engaged in a 1031 exchange with a 45-Day Exchange Period or 180-Day Exchange Period deadline between April 1 and July 15, 2020, will have an automatic extension to July 15th.  Unfortunately, this notice does not provide extensions for anyone whose 45-Day or 180-Day deadline was in February or March.

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Taxpayers currently engaged in a 1031 exchange with a 45-Day Exchange Period or 180-Day Exchange Period deadline between April 1 and July 15, 2020, will have an automatic extension to July 15th.  Unfortunately, this notice does not provide extensions for anyone whose 45-Day or 180-Day deadline was in February or March.  

Reading the two sections of Section 17 of Rev. Proc. 2018-58 together, some practitioners are suggesting that Notice 2020-23 did specify “otherwise” as to the timing of the extension within the meaning of Section 17.01, leading to the conclusion that the Section 17 relief is unavailable to exchangers.

In summary, it’s safe to conclude that the July 15, 2020 extension date is available, but those exchangers who need the 120-day extension period may find themselves in a “gray” area should they decide to rely on Section 17 instead. The Federation of Exchange Accommodators (FEA) and the National Association of Realtors (NAR) will continue working tirelessly to seek additional relief for those taxpayers not covered by these extensions.

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