IRS Extends 1031 Exchange Deadlines for Victims of Milton and Helene
In response to the devastating impacts of Hurricanes Helene and Milton across the southern United States, the Internal Revenue Service (IRS) has announced significant relief measures for affected taxpayers. This relief includes crucial extensions for those in the midst of Section 1031 exchange transactions, explicitly targeting the 45-day and 180-day deadlines that are pivotal to these exchanges.
Extended Timelines for 1031 Exchanges
Under normal circumstances, a valid 1031 exchange requires identifying a replacement property within 45 days of transferring the relinquished property and closing on the replacement property within 180 days of selling the relinquished property. However, recognizing the extraordinary circumstances caused by these hurricanes, the IRS has extended both deadlines to May 1, 2025, for qualifying taxpayers whose original deadlines fell before the designated “disaster dates.”
The disaster dates vary by state (and by county within those states):
Hurricane Helene
Hurricane Milton
(Also of note: the relief previously provided to counties affected by Hurricane Debby, which had extended deadlines to February 3, 2025, has now also been extended to May 1, 2025.)
Eligibility for Relief
To be considered an “affected taxpayer” eligible for this relief, individuals or businesses must have their principal location within a covered disaster area. However, it’s worth noting that there are various ways to qualify as an affected taxpayer, even if not directly located in these areas. Those who believe they may be impacted but are unsure of their status are encouraged to contact me directly, or to consult with their tax advisor.
Importantly, affected taxpayers in covered disaster areas are entitled to relief regardless of the location of their replacement or relinquished properties involved in the 1031 exchange.
Relief Options
The IRS has outlined two primary sections in Revenue Procedure 2018-58 that provide relief:
Under Section 17, deadlines are extended to the later of May 1, 2025, or 120 days from the original deadline, with certain restrictions based on tax return due dates and transfer timing.
The intricacies of 1031 exchanges can be challenging even in the best of times, and these disaster-related extensions add another layer of complexity. Taxpayers involved in 1031 exchanges who believe they may qualify for these extensions are strongly advised to seek guidance from a qualified tax professional as soon as possible.
Provident 1031 is uniquely positioned to assist here, with experts who can provide comprehensive guidance throughout the transaction process, ensuring compliance with these new relief measures.
It’s important to note that the IRS may update these extensions or expand the list of covered disaster areas without issuing new notices. Affected taxpayers are encouraged to regularly check this page, or the IRS website, for the most current information regarding this relief.
As communities continue to recover from the impacts of Hurricanes Milton and Helene, these extended deadlines provide much-needed flexibility for those navigating the complexities of 1031 exchanges in challenging times.
