IRS Announces Disaster Relief for Los Angeles County: Extended Deadlines for 1031 Exchanges 

The recent wildfires in Los Angeles County have left a profound impact on residents and businesses. In response, the IRS issued a notice on January 10, 2025, declaring Los Angeles County a federally recognized disaster area. This declaration triggers important deadline extensions for individuals and businesses currently involved in 1031 Exchanges

At Peak 1031 Exchange, we are here to help you navigate these changes and provide clarity on the relief measures available. 

 

Understanding the Disaster Relief Extensions 

The IRS allows Affected Taxpayers in Los Angeles County to benefit from extended deadlines under two sections of Rev. Proc. 2018-58: Section 6 or Section 17. Taxpayers can choose one of these options, but not both. Here’s a closer look at each: 

 

Section 6 Relief 

Section 6 applies exclusively to Affected Taxpayers, defined as individuals or businesses residing or operating in the designated disaster area. 

  • Deadline Extensions: Deadlines falling between January 7, 2025, and October 15, 2025, are automatically extended to October 15, 2025
  • Applicable Deadlines: This includes the 45-day identification period and other relevant deadlines that fall within the disaster relief period. However, the 180-day exchange completion deadline is not extended if it falls outside this period

 

Example of Section 6 Relief: 

An Affected Taxpayer sells their relinquished property on June 15, 2025 (after the disaster date). The 45th day of their identification period falls on July 30, 2025, which is within the disaster relief period. Under Section 6, the deadline to identify replacement properties is extended to October 15, 2025. However, the 180th day deadline remains unchanged if it falls outside the postponement period. 

 

Section 17 Relief 

Section 17 applies to both Affected Taxpayers and Non-Affected Taxpayers, provided specific criteria are met. 

  • Eligibility Criteria: Relinquished property must have been transferred or parked on or before January 7, 2025 (the disaster date). 
  • Deadline Extensions: Both the 45-day identification period and the 180-day exchange completion period may be extended by 120 days or until October 15, 2025, whichever is later. 
  • Important Limitations: Extensions cannot exceed: 
  • The due date of the taxpayer’s return (including extensions) for the year of the property transfer. 
  • One year from the original deadline. 

 

Example of Section 17 Relief: 

An Affected Taxpayer sells their relinquished property on June 1, 2025 (after the disaster date). The 45th day falls on July 16, 2025, and the 180th day falls on November 28, 2025. Taxpayer cannot benefit from Section 17 extension because the exchange began AFTER the disaster date. 

 

Relief for Non-Affected Taxpayers 

Non-Affected Taxpayers can qualify for Section 17 relief if their 1031 Exchange commenced on or before January 7, 2025, and they experience difficulties meeting deadlines due to the disaster. Section 6 relief is not available to Non-Affected Taxpayers. 

 

Next Steps for 1031 Exchangers 

If you are currently involved in a 1031 Exchange and may be eligible for relief, here’s what you should do next: 

  1. Consult Your Tax Advisor: Work with your CPA or tax advisor to confirm your eligibility for relief and determine which option—Section 6 or Section 17—is best for your situation. 
  2. Understand Your New Deadlines: Carefully review the extended deadlines and how they align with your transaction timeline. 
  3. Reach Out for Support:mAt Peak 1031 Exchange, we are here to guide you through this process and answer any questions you may have. 

 

Additional Resources 

For more information about the disaster relief extensions and their implications, refer to these helpful links: 

 

We’re Here to Help 

At Peak 1031 Exchange, we understand the challenges these wildfires have brought to our community. Our team is committed to supporting you every step of the way. If you have questions about these relief measures or your specific 1031 Exchange, don’t hesitate to contact us. 

Together, we will navigate these challenges and rebuild stronger. 

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