1031 exchange 45 day identification and 180 day exchange periods can be extended by Presidentially declared disasters, terroristic or Exchangors serving in combat zones. Extensions apply to both forward and reverse 1031 exchanges.
IRS Written Confirmation
The IRS publishes a notice or IRS News Release defining:
- Location of disaster;
- Length of exchange period postponements;
- Exchangors affected;
- Acts that have been postponed.
Do not rely on the verbal response of an IRS Agent. Only IRS extensions in writing can be used to support Exchangor’s actions.
The Robert T. Stafford Disaster Relief and Emergency Assistance Act defines disaster as “any natural catastrophe (including any hurricane, tornado, storm, high water, wind-driven water, tidal wave, tsunami, earthquake, volcanic eruption, landslide, mudslide, snowstorm or drought),or, regardless of cause, any fire, flood, or explosion, in any part of the United States, which in the determination of the President causes damage of sufficient severity and magnitude to warrant major disaster assistance to supplement the efforts and available resources of states, local governments, and disaster relief organizations in alleviating the damage, loss, hardship, or suffering caused thereby.”
Regulation § 301.7508A-1(d)(1) defines the seven types of affected Exchangors while terroristic or military action is defined in Internal Revenue Code § 692(c)(2).
Typically, the exchange periods are extended 120 calendar days but in no event may the postponement extend beyond the Exchangor’s tax return due date including extensions or one year. Not all Exchangors qualify for an extension. In all cases, seek the advice of your financial or legal advisor. To view tax relief for disaster situations, go to Item Two of Tax Updates.
