Earlier today, we shared information on disaster relief available to taxpayers affected by Hurricane Ian. Disaster relief is also available to those currently in the...
Earlier today, we shared information on disaster relief available to taxpayers affected by Hurricane Ian. Disaster relief is also available to those currently in the middle of Section 1031 exchange transactions. The 45-day and 180-day deadlines have been postponed for the entire states of Florida, South Carolina, and North Carolina. The start of the disaster dates are:
- Florida: September 23, 2022
- South Carolina: September 25, 2022
- North Carolina: September 28, 2022
The general postponement date is February 15, 2023.
Revenue Procedure 2018-58 provides two different sections that can be relied upon in these situations.
- Section 6: This section applies to affected taxpayers only. Any 45-day deadline or 180-day deadline that falls on or after the disaster date above is postponed, which in this case would be until February 15, 2023.
- Section 17: This section is applicable to affected taxpayers and other taxpayers who have difficulty meeting the 45-day or 180-day exchange period deadline due to a federally declared disaster. A taxpayer who is a transferor qualifies for a postponement under this section only if the relinquished property was transferred on or before the date of the federally declared disaster. If the last day of a 45-day identification period or the last day of a 180-day exchange period falls on or after the date of the federally declared disaster, the periods are postponed by the later of 120 days from the period or the last day of the general disaster extension period. However, in no event may a postponement period extend beyond the due date, including extensions, of the return for the year of the transfer, or one year. Examples of potential difficulties are if the relinquished property or the replacement property is located in a covered disaster area; the principal place of business of any party to the transaction is located in the covered disaster area; a party of the transaction is killed, injured, or missing as a result of the federally declared disaster; documents are missing as a result of the federally declared disaster; a lender decides permanently or temporarily to not fund a real estate closing; or insurance cannot be secured in order to settle or close the real estate transaction.
While situations such as these can be pretty confusing, our Section 1031 exchange compliance and consultation team is here to help. Please reach out with any questions.
A big thanks to Jeremy Siebert for authoring this blog post.