January 21, 2025

IRS Extends 1031 Deadlines for Taxpayers Affected by California Wildfires

Holland & Knight West Coast Real Estate and Land Use Blog
Douglas A. Praw | Zachary Brenner
Breaking Ground: West Coast Real Estate and Land Use Blog

In order to give relief to those taxpayers who are impacted by the California wildfires, on Jan. 10, 2025, the IRS announced the extension of the deadline for 1031 exchanges.

Taxpayers who qualify for relief, also called "Affected Taxpayers," include individuals who reside in, or entities whose principal place of business is situated in, an area designated by the Federal Emergency Management Agency (FEMA) as the "Covered Disaster Area." This area currently encompasses all of Los Angeles County and also applies to taxpayers who have difficulty meeting the deadlines during the disaster.

Specifically, an Affected Taxpayer is:

  • any individual whose principal residence is located in the Disaster Area
  • any business entity or sole proprietorship that has its principal place of business located in the Disaster Area
  • any individual who is a relief worker and is assisting with the Disaster Area
  • any individual or business entity whose records are kept in the Disaster Area

Key Extension Dates

For Affected Taxpayers, the extensions permit eligible persons who began an Internal Revenue Code (IRC) Section 1031 exchange between Nov. 23, 2024, and Jan. 7, 2025, to extend the 45-day identification period to Oct. 15, 2025, regardless of where the relinquished property or replacement property is located. The extensions also permit eligible persons who began a Section 1031 exchange between July 11, 2024, and Jan. 7, 2025, to extend the 180-day exchange period to the later of Oct. 15, 2025, or 120 days after the original 180-day deadline date.

The extensions also permit eligible persons who began a reverse exchange in between Dec. 31, 2024, and Jan. 7, 2025, to extend the five-business day period to enter into a Qualified Exchange Accommodation Agreement to Oct. 15, 2025.

Taxpayers involved in a 1031 exchange who do not meet the criteria of an Affected Taxpayer can still qualify for the extension if they would otherwise have difficulty meeting the standard 45-day or 180-day deadline. In such cases, taxpayers must have transferred their relinquished property on or before Jan. 7, 2025.

Businesses should note that such relief may also be applicable to quarterly payroll and excise tax returns, calendar-year partnership and S corporation returns.

The California Franchise Tax Board conforms to the foregoing extensions.

Next Steps

Although this article covers the basics, there are additional nuances in qualifying for and satisfying the requirements of Section 1031. For additional information or questions concerning the information covered in this article or any other issues related to Section 1031, please contact your tax preparer or a Holland & Knight attorney.

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