The IRS issued new guidance Thursday night that granted extensions to all taxpayers in 1031 exchanges with a 45-day Exchange period or 180-day Exchange period deadline between April 1st and July 15th, 2020. These investors will have an automatic extension to July 15th.
Here are two examples to help explain the deadline extension:
The exchange began on April 1st, 2020. The 45th day is May 16th, which would be extended to July 15th, 2020. The Seller must still close on the replacement property by September 28th, which is the 180th day; because September 28th is after the last day of the disaster period (July 15th).
The exchange began December 31st, 2019, 45th day is February 14th, 2020. The ID period is not extended because it is before April 1st. The 180th day is June 28th, which would be extended to July 15th, 2020.
We are watching this situation very closely and will continue to inform our clients of changes that might affect their 1031 exchange.