Navigating IRS Disaster Extensions for 1031 Exchanges and Beyond

The recent wildfires in California have not only devastated communities but also disrupted the financial planning of many investors. Recognizing the profound impact of these disasters, the IRS has announced significant tax relief measures to assist affected individuals and businesses. For those involved in 1031 exchanges within Los Angeles County, this relief is particularly pertinent.

Extended Deadlines for 1031 Exchanges

Under the new IRS guidelines, taxpayers in designated disaster areas now have until October 15, 2025, to meet the critical deadlines associated with their 1031 exchanges. This extension applies to both the 45-day identification period and the 180-day completion period, providing much-needed flexibility amidst the chaos caused by the wildfires. To qualify, your exchange deadlines must fall between January 7, 2025, and October 15, 2025, and you must be classified as an “affected taxpayer” as per IRS regulations.

Relief for Hurricane Helene Affected Areas

In addition to the California wildfires, the IRS has extended similar relief to those impacted by Hurricane Helene, covering parts or all of seven states, including Alabama, Georgia, North Carolina, South Carolina, Florida, Tennessee, and Virginia. Taxpayers in these areas now have until May 1, 2025, to file various federal tax returns and make necessary payments. This extension includes 2024 individual and business returns typically due in March and April 2025, as well as quarterly estimated tax payments.

How to Claim Your Relief

Understanding these extensions is crucial for maintaining compliance and ensuring your 1031 exchanges proceed smoothly despite recent disasters. The IRS automatically applies this relief to taxpayers with addresses in the designated disaster areas. However, if your records are located in a disaster zone but your mailing address is not, or if you are assisting in relief efforts, you should contact the IRS Disaster Hotline at 866-562-5227 to request relief.

Additional Financial Relief Options

Additionally, individuals and businesses that have suffered uninsured or unreimbursed disaster-related losses can claim these on their tax returns, offering further financial relief during this period. Remember to include the FEMA disaster declaration number on any relevant tax filings to ensure proper processing.

A Note on Other Recent Disasters

With multiple disasters such as wildfires and hurricanes impacting various regions, the IRS continues to provide rolling guidance and extensions. If you’re in an area declared a federal disaster zone, similar extensions may apply. Always verify your eligibility and new deadlines with a tax professional or by checking the latest IRS announcements at irs.gov.