April 13, 2020

What’s the New Deadline for 1031 Swaps? Depends Whom You Ask

The Real Deal

Tax senior counsel David Shechtman is quoted in “What’s the New Deadline for 1031 Swaps? Depends Whom You Ask” by Mary Diduch, published in The Real Deal on April 13, 2020. Typically, those who own property through 1031 swaps would have 45 days after selling to identify the replacement and 180 days to close the deal with a tax break for reinvesting in “like-kind” properties. In Revenue Procedure 2018-58, the IRS said that in times of federally declared disasters, there may be an automatic 120-day extension on 1031 swaps. However, on April 9, the IRS’s Notice 2020-23 extended the deadline on a variety of tax filings—including personal income—to July 15, while not making clear whether July 15 is a hard deadline for 1031 buyers who need replacement properties.

As the notice only appears to impact deals with a timeline starting after April 1, a slew of pending deals from weeks prior could be at risk. This could particularly impact deals that involve construction, because many projects have been put on hold, pushing out closings beyond July 15, said David Shechtman. He added, “If you believe you only have a July 15 hard stop, that’s not of great assistance to a number of taxpayers who are in the midst of exchanges.” The IRS may come out with more specific regulations.

Read the full article.
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