Deadlines for Section 1031 Exchanges Extended:
On April 9, 2020, the IRS published Notice 2020-23 (the “Notice”), which extends certain Section 1031 time periods. The Notice states that Section 1031 45-day identification and 180-day acquisition deadlines that fall on or after April 1, 2020 can be extended to July 15, 2020. It follows that any such deadline that took place prior to April 1, or is scheduled for after July 15, will remain unaffected by the Notice at this time.
It is our current understanding the extensions permitted in the Notice are intended as relief to taxpayers, and are not meant to penalize. As a result, it may not be to an exchanger’s advantage to extend its deadline as permitted thereunder. We encourage all exchangers to promptly discuss the qualifications for an extension, as well as the benefits and/or drawbacks to an extension with their legal and/or tax advisor. If, after such consultation, there is a benefit and desire to take advantage of an extension to July 15, IPE 1031 is ready to assist.
We do not know whether the Notice will be the final word from the IRS on Section 1031 deadlines or if there will be further guidance in the coming days. For up to date information on any of these issues, please feel free to contact us or visit the IRS’s COVID-19 informational site at https://www.irs.gov/coronavirus-tax-relief-and-economic-impact-payments.
What if the County Recorder’s Office closes or falls behind on recordings?
Many parts of the country have seen the local county recording office closing temporarily or working with a reduced staff and falling behind on recordings. For taxpayers completing exchanges under strict timelines, the transfer occurs when the burdens and benefits of ownership transfer from one party to another. This generally happens when the terms of the purchase and sale agreement have been satisfied and the buyer receives possession of the replacement property. The recording of a deed by the county recorder simply memorializes what has already happened when ownership transferred along with the burdens and benefits of ownership. As a result, if the recordings fall behind, it should not impact your exchange.
IPE 1031 IS OPEN FOR BUSINESS
At IPE 1031, we take pride in building strong relationships with our exchangers and their advisors, and we in turn greatly appreciate the trust you have placed in us over the years. We are open for business and stand ready to assist with your exchange transaction. IPE 1031 has plans and procedures in place to ensure all of our exchangers receive the same customized value they expect, and their exchanges remain unaffected by the recent impact of COVID-19 on our communities. If you need a personal exchange consultation, we are happy to schedule a conference call at a time that works with your schedule and situation.
If you have an ongoing exchange, our team members are here to assist you with finding the answers to your questions. IPE 1031 and all of its team members can be contacted via phone, email, or our website. In other words, it is business as usual. General inquiries to IPE 1031 can be made at [email protected] and additional contact information can be found at our website: www.IPE1031.com. Please do not hesitate to contact us with your questions or concerns in these uncertain times. We look forward to hearing from you.