1031 Exchange and Opportunity Zones Extensions due to Covid-19

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Currency exchange office with two people

Photo by noodle kimm on Unsplash

For those of you watching the clock tick away on your 1031 exchange or Opportunity Zone rollover, some good news arrived.

Late last week, the IRS issued Notice 2020-23, extending a variety of deadlines, including 1031 exchange deadlines. Although the Notice lacks clarity, because it is not written like the typical Disaster Relief Notices, this Notice extends any 45-day or 180-day deadline that occurs between April 1 and July 14, to July 15, 2020.

Please note that this extension remains different from the usual disaster extension that provides for an extra 120 days.

The examples below illustrate the current extension:

  • Example 1: Exchange began April 1, 2020. 45th day is May 16, which would be extended to July 15, 2020. Taxpayer must still close on replacement property by Sept 28, which is the 180th day; because Sept 28 is after the last day of the disaster period (July 15).

  • Example 2: Exchange began Dec 31, 2019, 45th day is Feb 14, 2020. ID period is not extended because it is before April 1. The 180th day is June 28, which would be extended to July 15, 202

  • Opportunity Zones.  If an investor who sold a capital asset planned to roll over the gain into an Opportunity Fund and the 180-day deadline to do so falls between April 1 and July 15, 2020, he or she can make the investment as late as July 15.  

Most of these tax laws remain a moving target, so to be sure, 1031 exchangers should speak with their tax advisors to determine if they are eligible for an extension.