For qualified California residents and business owners, the next several months of 2023 are one of the best times in recent memory to begin a 1031 exchange. The reason for this is the recent 1031 exchange deadline extensions issued by the IRS, which essentially allow qualifying California taxpayers to extend any exchange deadline that falls after January 8, 2023 out to October 16, 2023. This means that for the next several months, qualifying taxpayers can initiate a 1031 exchange that has a much longer identification period.
For example, if a taxpayer closes on the sale of their relinquished property on April 3, 2023, they would normally have a 45-day identification deadline of May 18, 2023 and a 180-day exchange deadline of September 30, 2023. Presently, because of the extensions, this same taxpayer would have both of their exchange deadlines extended to October 16, 2023. This effectively means that such a taxpayer would have no identification deadline, since their exchange deadline falls on the same date. Even for qualifying taxpayers who close on their relinquished property months from now, they still get the benefit of a much longer identification period than the usual 45 days, as their identification deadline would be pushed out to October 16, 2023.
For more information on the California 1031 exchange deadline extensions, see our articles here and here. As always, exchangers must speak with their tax advisors to determine if they are eligible for an extension and if so, what their new deadlines are. Link to the IRS Disaster Relief Notice can be found here.
If you or someone you know has questions about the 1031 exchange process, our team of experts at Peak 1031 Exchange are here to help. Contact us today at [email protected] or by calling us at 818-960-7019 to discuss the deferral of capital gains taxes with a 1031 exchange.