IRS Deadline Extensions for 1031 Exchanges & Opportunity Zone Investors

Drew Sigfridson, SIOR  /   April 14, 2020


On April 9th, 2020, the IRS published Notice 2020-23  in which the IRS extended a number of deadlines for tax return filings and a select number of deadlines imposed under the Internal Revenue Code in response to the COVID-19 pandemic.  As a result, individuals, corporations, trusts, estates and other taxpayers that ordinarily would have had a filing, payment or other deadline between April 1st, 2020, and July 15th, 2020, now qualify for an extension.

Like-Kind Exchange (1031 Exchanges)

Among the deadlines included in Notice 2020-23 were the 45-day identification periods and the 180-day exchange periods set forth in the like-kind exchange rules of Code Section 1031. Normally, like-kind (1031) exchanges permit investors to sell one property and then identify a similarly valued property to buy with the proceeds within 45 days and close on it within 180 days. This process allows the investors to avoid paying any capital gains taxes on the sale. Under Notice 2020-23, if expiration of the taxpayer’s 45-day identification period is a date that is within April 1, 2020 and ending on July 14th, 2020, the 45-day identification period is automatically extended to end on July 15th, 2020.  Additionally, if expiration of the taxpayer’s 180-day exchange period is a date that is within April 1st, 2020 and ending on July 14th, 2020, the 180-day exchange period is automatically extended to end on July 15th, 2020 as well.

It is important to note that if an investor’s 45-day identification period is extended to July 15, 2020 under Notice 2020-23, the relief in this IRS notice will not extend the 180-day exchange period if the expiration of that period ends after July 14th, 2020.

Opportunity Zone Investments

Notice 2020-23 also addressed deadlines for investment of qualified capital gains in qualified opportunity funds.  Normally, a taxpayer that has capital gains from the sale of any property has 180 days from the date of the sale to invest the gains in an opportunity fund.  Notice 2020-23 extends the deadline to July 15th , 2020 for any 180-day period that ends between April 1st, 2020 and July 15th, 2020.