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1031 Exchange Time Frames Extended by the IRS

Dear Valued Client/Partner,

We are pleased to share the following information with you. Yesterday afternoon, the IRS issued guidance (Notice 2020-23) providing time-constraint relief for Section 1031 Like-Kind Exchanges. Under this deadline extension language, it appears that any 45-day or 180-day deadline occurring between April 1 and July 14 will be extended to July 15, 2020.

Example 1: For a 1031 Exchange that began on April 1st, 2020, the 45-Day Identification Period Deadline would normally be May 16th. Under the Notice, this deadline is extended to July 15th, 2020. The Exchanger must still close on all replacement property by Day 180 of their Exchange (the Exchange Period Deadline), which is September 28th, because this date falls after the July 15th ending date of the extension period.

Example 2: For a 1031 Exchange that began on December 15th, 2019, Day 45 was January 29th. This ID Period Deadline is not extended because it fell prior to April 1st. Although their 180-day Exchange Period Deadline falls on June 12th, the Exchanger receives an extension under the Notice to July 15th.

ERG interprets the Notice as allowing those initiating a 1031 Exchange between now and May 30 to benefit from the extension period, as it relates to their 45-Day Identification Period. Such an Exchanger’s ID Period will push out to July 15, 2020.

1031 Exchanges are designed to promote economic growth throughout the country and in our communities. We are pleased that the IRS has determined that investors utilizing this beneficial section of the Internal Revenue Code to make real property reinvestments while deferring tax liabilities should not be harmed by the effects of the COVID-19 pandemic. As with other pandemic-related information, guidance here is not comprehensive and may not be final. We will do our very best to share new information as we receive it.

This information is not to be construed as tax or legal advice. ERG strongly recommends that anyone contemplating a 1031 Exchange consult with their tax and/or legal advisors in-advance.


The ERG Team

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