IRS Extends Tax Deadlines – Good news for 1031 Exchange!

IRS Extends Tax Deadlines

The IRS issued guidance Thursday evening to grant deadline relief for both 1031 like-kind exchanges and opportunity zone investments that are already underway.  Both of these programs are designed to promote economic growth in communities, and NAR made the case that investors in these programs should not be harmed due to the effects of COVID-19.

  • 1031 Like-kind exchanges.  If an investor has taken the first step of a like-kind exchange by selling the old property, and either the 45-day or the 180-day deadline falls between April 1 and July 15, the deadline has been extended to July 15.
  • Opportunity Zones.  If an investor who sold a capital asset planned to roll over the gain into an Opportunity Fund and the 180-day deadline to do so falls between April 1 and July 15, 2020, he or she can make the investment as late as July 15.
 Also, sole proprietors who pay quarterly estimated taxes now have until July 15 to file their second quarter payment.  As a result of an earlier IRS notice, first quarter estimated tax payments had already been extended to July 15.  This means that any individual or corporation that has a quarterly estimated tax payment due on or after April 1, 2020, and before July 15, 2020, can wait until July 15 to make that payment, without penalty.

Examples

  • Taxpayer Bob sold his property on March 1st.  His day 45 deadline of 4/15 is now extended to 7/15.
  • Taxpayer Sue sold her property on October 4, 2019.  Her day 180 of 4/1/2020 is now extended to 7/15/2020.  She does not have an extension for her day 45.

It is unclear if this will be the final guidance that the IRS issues related to 1031 Exchange deadlines.  It leaves some questions unanswered and does not go into as much detail as we would have hoped.  We are working diligently for further guidance from the IRS and will update you as soon as we have further clarification. Please visit MY BLOG for regular updates during this crisis!

Posted on April 10, 2020 at 7:29 pm
Ravi Jagtiani | Category: My Blog

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