Extensions for 1031 Exchanges
As a Qualified Intermediary, we are often asked if there are any extensions granted to the timeframes of a 1031 Exchange. Unfortunately, it is uncommon for an extension.
Revenue Procedure 2018-58 states that the IRS will grant an extensions when the federal government declares an area to be a “federally-declared” disaster area. But just by an area being declared a disaster area does not automatically provide an extension. The IRS must release an official Notice which makes the tax relief provided by the Revenue Procedure available.
For a taxpayer to qualify for the extension, they must meet the following requirements:
- The Relinquished Property must have been transferred on or before the date of the Federally-Declared Disaster Area; and
- The Exchangor must have a challenge in meeting the deadlines due to
- The relinquished or replacement property is in the disaster area,
- The primary place of business of any party to the transaction is located in the disaster area, or
- A closing agent cannot provide title insurance or closing services due to the disaster,
In most situations, Section 17 of the Revenue Procedure provides a time extension of either 120 days or will set a specific date of extension.
The link to the IRS website to find out about disaster extensions can be found at https://www.irs.gov/newsroom/tax-relief-in-disaster-situations.
If you believe you qualify for this extension, you must consult with your tax professional. We cannot provide tax advice, including in situations like this.
For additional information, please reach out to your tax professional for specific questions or contact the specialists here at Security 1st Exchange for assistance.