IRS Extends Deadlines for 1031s and Opportunity Zone Investments

In a notice issued on April 9, 2020, the IRS has granted “additional time to perform time-sensitive actions”. This includes the granting of deadline relief for both 1031 like-kind exchanges and Opportunity Zone investments.

To be eligible to defer the gain on sale of a property under a 1031 exchange, the owner needs to identify a replacement property within 45 days of selling the old property. In addition, they also must close on the replacement property purchase within 180 days of selling the old property.

If an investor has sold a property, and either the 45-day deadline to identify a property or the 180-day deadline to close on a replacement property falls between April 1st and July 15th 2020, those deadlines have both been extended to July 15, 2020.

Schmidt Westergard Observation: If your 45-day period falls within the covered period, it is still unclear whether the 180-day deadline is also extended since it falls outside the April 1st through July 15th 2020 period.

If an investor sold a capital asset and planned to roll the gain into an Opportunity Fund and the 180-day deadline falls between April 1, 2020 and July 15, 2020, they now have until July 15, 2020 to make the investment.

Schmidt Westergard Observation: The extension of time does not seem to extend the amount of time a Qualified Opportunity Zone Fund has to invest into a Qualified Opportunity Zone Business.

Disclaimer: Please note this is based on the information that is currently available and is subject to change.


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