On August 16, 2023, the IRS issued Notice IL-2023-06 for portions of Illinois, and on August 21, 2023, the IRS issued Notice HI-2023-05 for portions of Hawaii. These notices may extend your 1031 deadlines pursuant to IRS Revenue Procedure 2018-58 (Rev. Proc.). 

For the Illinois disaster declaration, Section 6 of the Rev. Proc. allows certain taxpayers to extend certain 1031 deadlines to October 31, 2023, and Section 17 of the Rev. Proc. allows certain taxpayers to extend certain 1031 deadlines to October 31, 2023 or 120 days – whichever is later (however, this section 17 extension cannot go beyond one year or the due date for the taxpayer’s tax return for the year of the sale, as extended).  As of August 16, 2023, the disaster area for this Illinois declaration is Cook County, Illinois.

For the Hawaii disaster declaration, Section 6 of the Rev. Proc. allows certain taxpayers to extend certain 1031 deadlines to February 15, 2024, and Section 17 of the Rev. Proc. allows certain taxpayers to extend certain 1031 deadlines to February 15, 2024 or 120 days – whichever is later (however, this section 17 extension cannot go beyond one year or the due date for the taxpayer’s tax return for the year of the sale, as extended).  As of August 21, 2023, the disaster areas for this Hawaii declaration are Maui and Hawaii Counties, Hawaii.

Taxpayers meeting the definition of “Affected Taxpayer” are eligible for both the Section 6 and Section 17 extensions, regardless of the relinquished property and/or replacement property location and must choose which extension option to proceed under. The definition of “Affected Taxpayer” includes individuals who live, and businesses whose principal place of business is located, in the covered disaster area. The Section 17 extension is also available to taxpayers who are having difficulty meeting their 1031 deadlines due to the disaster (See Rev. Proc. Section 17.02(b)(ii) for examples of such “difficulty”).

For a more detailed explanation of the Disaster Relief extensions click here: apiexchange.com/disaster-relief/

All disaster declarations for which the IRS has provided an extension of 1031 deadlines can be found here: https://www.irs.gov/newsroom/tax-relief-in-disaster-situations

Taxpayers should consult their tax advisor to determine their eligibility for an extension and alert their Exchange Counselor as soon as possible of any extended 1031 deadlines.