Potential 1031 Exchange Extensions for Taxpayers Affected by Hurricane Irma

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Taxpayers affected by Hurricane Irma may qualify for tax relief from the IRS. In response to the President’s declaration of a major disaster qualifying for assistance by FEMA in the State of Florida, the IRS has issued tax relief Notice FL-2017-04 (last updated September 15, 2017), which in part extends tax-related deadlines that are due to be performed on or after September 4, 2017 and before January 31, 2018.

Parties who may be entitled to the extension include “affected taxpayers,” taxpayers who reside or have a business in the “disaster area,” defined in the Notice for purposes of Treas. Reg. § 301.7508A-1(d)(2) as including: All 67 Counties in Florida.

Additionally, taxpayers conducting a tax-deferred 1031 exchange who transferred their relinquished property on or prior to September 4, 2017 may also be entitled to the above-referenced extension, even if they are not an “affected party” as described in the Notice. Pursuant to Rev. Proc. 2007-56, affected parties or parties who have difficulty meeting their 45-day identification or 180-day exchange deadline due to Hurricane Irma (examples are provided in the Rev. Proc.) may be entitled to the extension. Such entitled parties have an extension of 120 days, or until January 31, 2018, whichever falls later. Note that in no event may a deadline be extended beyond the due date of the taxpayer’s tax return for the year of the transfer of their relinquished property.

If you are conducting a 1031 tax-deferred exchange and believe you are entitled to the above extension, it is strongly recommended that you contact your tax professional for further guidance.

To check for updates to the scope of the disaster area and to the Notice: http://connect.oldrepublictitle.com/e/104662/s-of-hurricane-irma-in-florida/q8hqb/96962437  

To see the full text of Rev. Proc. 2007-56 (Section 17 pertains to 1031 Like-Kind Exchanges): http://connect.oldrepublictitle.com/e/104662/irb-2007-34-IRB-ar13-html/q8hqg/96962437