In response to the effects of California wildfires and straight-line winds that began on January 7, 2025, the IRS has announced relief for taxpayers in affected areas. This relief includes an extension for certain taxpayers who are in the process of completing a 1031 exchange, offering additional time for both the 45-day identification period and the 180-day completion period. Below, we outline the key details.
Disaster Overview
- Disaster Date: January 7, 2025
- Extension Date: October 15, 2025
- Covered Disaster Area: Los Angeles County, California
- Affected Taxpayers: Includes individuals residing and businesses with principal places of business in the Covered Disaster Area. Notably, this relief applies regardless of the location of the relinquished or replacement property.
Relief Options
1. General Postponement
- Eligibility: Exclusively available to Affected Taxpayers. The exchange may have commenced either before or after the Disaster Date.
- Deadline Extensions: Any 45-day or 180-day deadline that falls on or after January 7, 2025, and before October 15, 2025, is extended to October 15, 2025; Deadlines occurring after October 15, 2025, remain unchanged.
2. Alternative Extension
- Eligibility: Affected Taxpayers, or Taxpayers who face difficulty meeting the 45-day or 180-day deadlines under conditions outlined in Revenue Procedure 2018-58, Section 17. This option applies only if the relinquished property was transferred (or the parked property acquired by the EAT in a reverse exchange) on or before January 7, 2025.
- Deadline Extensions: Any 45-day or 180-day deadline that falls on or after January 7, 2025, is extended to the later of October 15, 2025, or 120 days from the original deadline. Extensions cannot exceed one year or the tax return due date (including extensions) for the year the relinquished property was disposed of. Additionally, if a 45-day identification period fell before January 7, 2025, and an identified replacement property was substantially damaged by the disaster, the deadline is extended.
How Can 1031 Crowdfunding Help?
If you believe you qualify for these extensions, consult your tax professional for personalized guidance.
This relief aims to provide affected taxpayers with the flexibility they need to navigate their 1031 exchanges during this difficult time. By staying informed and consulting with professionals, taxpayers can ensure compliance while leveraging the available extensions.
Note: The IRS may expand the Covered Disaster Area or adjust the extension date without issuing a new notice. Regularly check the IRS website for updates.
This material does not constitute an offer to sell or a solicitation of an offer to buy any security. An offer can only be made by a prospectus that contains more complete information on risks, management fees and other expenses. This literature must be accompanied by, and read in conjunction with, a prospectus or private placement memorandum to fully understand the implications and risks of the offering of securities to which it relates. As with all investing, investing in private placements is speculative in nature and involves a degree of risk, including loss of your principal. Past performance is not necessarily indicative of future results and forward-looking statements and projections are not guaranteed to achieve the results described and your actual returns may vary significantly. Investments in private placements are illiquid in nature and there may be no secondary market or ability to sell the investment should the need for liquidity arise. This material should not be construed as tax advice and you should consult with your tax advisor as individual tax situations will vary. Securities offered through Capulent, LLC Member FINRA, SIPC.
