We started a reverse-1031 transaction with a replacement property bought on Sept 29, 2022. We ID'ed the relinquished property on Oct 1, 2022. However, we couldn't sell the relinquished property by the 180-day deadline on Mar 29, 2022. CA had the wettest winter this year and IRS threw us a lifetime.

We claimed disaster relief as part of IRS disaster relief that allowed individuals and businesses to extend any deadline falling after Jan 8, 2023, to Oct 16, 2023. This effectively extended the 180-day deadline to Oct 16, 2023. We sold the originally ID'ed relinquished property of Jun 15, 2023, successfully completing the reverse part of the 1031 transaction.

We still have money left in the exchange. Now, my 45-day ID deadline for the regular 1031 would be July 30, 2023. If I claim disaster extension again, I can extend the deadline to Oct 16, 2023 with the 180-day closing date remaining as Dec 12, 2023.

My CPA is strongly advising against claiming the disaster extension twice, but he hasn't provided any guidance to support this claim. His stance is purely precautionary. On the other hand, the 1031 intermediary believes that it's a low-risk move, but they ultimately defer to the CPA. Therefore, while I would love the extra time to mitigate risk but not at the cost of the whole exchange potentially failing due to an audit.

So, while I understand that it's not advisable to seek tax advice from strangers on the internet, I'd appreciate hearing your opinions before I engage RE tax attorneys in the next week.

1031 deadlines with disaster extension - CA

Most Popular Reply