Just last week I posted and article regarding the absence of any reference within the CARES Act to the 1031 Exchange process. Well, there must have been a lot of other concerns with this absence. I have been involved with real estate and 1031 exchange replacement property since 1980. This is the first time I have seen an extension of the 45-day period on a nationwide basis. I hope this information is valuable to anyone who is doing an exchange now or in the near future.

DST Investments, LLC represents the major institutional DST Sponsors who offer replacement properties that qualify for the IRS 1031 Tax Deferred Exchange

45 and 180 Calendar Day Deadlines Extended to July 15, 2020

April 10, 2020—the U.S. Treasury (Internal Revenue Service) issued Notice 2020-23 late Thursday evening, April 9, 2020, granting relief to investors that are in the middle of a 1031 Exchange transaction.

This Notice is very different from the typical disaster declaration and extensions granted in the past and is somewhat confusing based upon the way it was drafted. Historically, the President would declare a Natural Disaster for a specific geographic area and a date specific event and the U.S. Treasury (Internal Revenue Service) would then issue a Disaster Relief Notice providing a 120-calendar day extension to the 45-day and 180-calendar day deadlines. This approach was not used this time.

Notice 2020-23, which revises Notice 2020-18, 2020-15 IRB 590 (April 6, 2020), and Notice 2020-20, 2020-16 IRB 660 (April 13, 2020), does not specifically address Section 17 contained within Revenue Procedure 2018-58, so it would initially appear that the 120-calendar day extension is not applicable to the current situation.

Affected Taxpayer (Investor)

The Notice provides that any person performing a time-sensitive action listed in either Section 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 on or before July 15, 2020 (Specified Time-Sensitive Action), is an Affected Taxpayer.

Deadline Extension

Therefore, the guidance provided within Notice 2020-23 applies to investors that have a 45-calendar day identification deadline or a 180-calendar day exchange deadline that falls on or after April 1st, 2020 and on or before July 15th, 2020. The applicable deadline that falls within those timelines is extended to July 15th, 2020.                 

DST Investments, LLC is not intended to serve as legal, tax or financial advice and make no express or implied warranty respecting the information presented herein and assumes no responsibility or liability for errors or omissions contained herein. You should consult with your own legal, tax and financial advisors regarding your specific real estate transaction or income tax circumstance.