Possible 1031 Exchange Extension for Investors in 2017 Calif. Fires

by Silicon Valley REALTOR Michelle Carr Crowe 

Ron Ricard, VP of Investment Property Exchange Services, Inc., shares the following information on possible extensions for 1031 exchange investors whose properties were involved in the many 2017 California wildfires. Always verify the data for your transaction with your tax, legal and real estate professionals before taking action.

Revenue Procedure 2007-56 permits extension of IRC §1031 exchange deadlines upon issuance of an IRS Notice or other guidance permitting relief to taxpayers due to Federally declared disasters. Note that an IRS Notice of a Federally declared disaster is different from a FEMA disaster declaration, and the extensions are not available until the IRS publishes its Notice granting relief which specifically references Revenue Procedure 2007-56.

Regarding the California wild fires, the IRS has issued a disaster relief notice relating to Orange, Solano, Butte, Lake, Mendocino, Napa, Nevada, Sonoma, and Yuba Counties in California extending deadlines as a result of the wildfires that began on October 8, 2017. The notice extends deadlines falling on or after 10/8/2017 and on or before 1/31/2018 for 120 days or until 1/31/2018 (whichever is later). To be eligible for the extension the relinquished property must have transferred before October 8, 2017.

As always, exchangers should speak with their tax advisors to determine if they are “affected taxpayers” and if so whether they are eligible for the extension.

Since this is an evolving situation, exchangers (and their advisors) should check the IRS website for updates. A link is on our website: https://www.irs.gov/uac/tax-relief-in-disaster-situations.

IRS Disaster Relief Updates

• California Disaster Relief - Wildfires
• Deadline Extension Summary
• Disaster Relief Extensions

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