You may remember our recent post about how the coronavirus pandemic was creating severe problems for investors conducting 1031 exchangers who were finding it almost impossible to meet the 45-day property replacement identification requirement.

We mentioned in that post that many industry groups had been advocating to the Department of the Treasury for an extension that would allow investors to successfully complete their exchanges and retain their tax deferral benefits. At the time, no extension had been granted.

Yesterday, however, relief arrived.

Extensions Announced for 1031 Exchange Deadlines on April 9, 2020

Those taxpayers currently engaged in a 1031 exchange and struggling to complete their transaction due to the Coronavirus (COVID-19) crisis received long awaited relief from the 45-Day Identification and 180-Day Exchange Period deadlines in Notice 2020-23. Released late this afternoon, this is an update to Notice 2020-18, “Additional Relief for Taxpayers Affected by Ongoing Coronavirus Disease 2019 Pandemic.”

The notice provides that any person performing a time-sensitive action listed in either § 301.7508A-1(c)(1)(iv) – (vi) of the Procedure and Administration Regulations or Revenue Procedure 2018-58, 2018-50 IRB 990 (December 10, 2018), which is due to be performed on or after April 1, 2020, and before July 15, 2020 (Specified Time-Sensitive Action), is an Affected Taxpayer. For purposes of this notice, the term Specified Time-Sensitive Action also includes an investment at the election of a taxpayer due to be made during the 180-day period described in section 1400Z-2(a)(1)(A) of the Code.  This includes the 45-Day Identification and 180-Day Exchange Period deadlines in a 1031 exchange.

Anyone with a 45-Day Identification Period or 180-Day Exchange Period deadline between April 1 and July 15, 2020 will have an automatic extension to July 15th.  Unfortunately, taxpayers with deadlines in February and March did not get the relief we were seeking.  The Federation of Exchange Accommodators (FEA), the national 1031 trade association, will be requesting additional relief for the taxpayers that need it. 

For those who had a 45-Day Identification Period deadline on or after April 1st, you will have an automatic extension of time to make or change an identification. Now that there is additional time to review your identification sheet,  this is a good time to consider using a Delaware Statutory Trust (DST) as a backup option.

Please contact us to discuss or if you have further questions regarding your personal exchange deadlines. Thank you. Stay healthy, stay safe.

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This is for informational purposes only and is not an offer to buy/sell an investment. There are risks associated with investing in Delaware Statutory Trust (DST) and real estate investment properties including, but not limited to, loss of entire principal, declining market value, tenant vacancies and illiquidity. Diversification does not guarantee profits or guarantee protection against losses. Potential cash flows/returns/appreciation are not guaranteed and could be lower than anticipated. Because investors situations and objectives vary this information is not intended to indicate suitability for any particular investor. This information is not meant to be interpreted as tax or legal advice. Please speak with your legal and tax advisors for guidance regarding your particular situation.

Securities offered through Concorde Investment Services, LLC (CIS), member FINRA/SIPC. Advisory services offered through Concorde Asset Management, LLC (CAM), an SEC registered investment adviser. Insurance products offered through Concorde Insurance Agency, Inc. (CIA) Fortitude Investment Group is independent of CIS, CAM, and CIA.

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