Due to the COVID-19 pandemic, the Department of Treasury and the Internal Revenue Service announced Thursday, April 9, in Notice 2020-23 that they were extending additional tax deadlines for individuals and businesses. Included is an extension for 1031-exchange and opportunity zone deadlines. Our team here at Diversified Investment Strategies is here to clarify what this means.
While 1031 exchanges and opportunity zones were not mentioned specifically in this IRS Notice, Section C of the Notice states that “Affected Taxpayers also have until July 15, 2020, to perform all Specified Time Sensitive Actions, that are due to be performed on or after April 1, 2020 and before July 15, 2020.” 1031 exchanges and opportunity zones fall into the list of “time-sensitive action.”
Real estate investors who have like-kind 1031 exchange or opportunity zone deadlines between April 1, 2020 and July 15, 2020 now have more time to close their deals. In other words, if you had a 1031 exchange with deadlines due on or after April 1, you now have until July 15.
1. f your 45-day identification deadline falls between April 1 and July 15, you have until July 15 to identify prospective replacement properties.
2. If you have an 180-day deadline to complete a 1031 exchange transaction between April 1 and July 15, you now have until July 15 to complete your exchange transaction.
Many questions were left unanswered, such as if any more relief will be coming for 1031 exchanges or opportunity zones, or if another extension will be available if July 15 isn’t long enough to complete transactions. But in the meantime, real estate investors can be thankful that the IRS acted on this so quickly and brought much needed relief for real estate investors.
Unfortunately, this Notice did not bright relief to taxpayers with deadlines in February and March, but the Federation of Exchange Accommodators, the national 1031 trade association, will be requesting additional relief.
Our team here at Diversified Investment Strategies will continue to keep you up-to-date with the latest information available for real estate investors during this unprecedented time. As always, please reach out to us with any questions you have, or for any assistance you need with your real estate investments!