Disaster ReliefJanna Shearman CES
October 27, 2008 — 1,278 views
In 2005, the IRS issued Revenue Procedure 2005-27 allowing for the possibility of extending your 1031 Exchange deadlines when affected by Presidentially Declared Disaster areas.
A taxpayer can benefit if:
A.) The relinquished property was transferred on or before the date of the Presidentially declared disaster, or the transfer to the exchange accommodation titleholder was completed in a reverse exchange before that date; and
B.) The taxpayer has difficulty meeting the deadlines because:
- The relinquished or replacement property is located in the disaster area;
- The principal place of business of any party to the transaction is located in the disaster area;
- Any party to the transaction (or an employee involved in the 1031 exchange) is killed, injured, or missing as a result of the disaster;
- A document prepared in connection with the exchange or a relevant land record is destroyed, damaged or lost as a result of the disaster;
- A lender decides not to fund the loan, or is unable to fund the loan due to lack of flood, disaster or hazard insurance; or
- A title company cannot provide title insurance due to the disaster.
Specifically, the Revenue Procedure:
A.) Adds a time extension of either 120 days or to the last day of the authorized general extension period, whichever is later;
B.) Adds extensions to the reverse exchange deadlines; and
C.) Clarifies who would qualify for the extensions.
The 120-day extension also applies if an already identified property is substantially damaged in the disaster.
It is important to know that the time extensions do not automatically apply to any disaster; they only apply if the IRS issues a Notice or News Release and if the taxpayer meets the designated criteria.
For a list of Recent Notices and News Releases visit the IRS website at: http://www.irs.gov/newsroom/article/0,,id=108362,00.html
Janna Shearman CES
Janna Shearman is vice president and manager of the Louisiana office of First American Exchange Company, a division of The First American Corporation (NYSE: FAF), America's largest provider of business information. She has worked in the exchange industry since 2004 and has attained the designation of Certified Exchange SpecialistÂ®. As a frequent lecturer on 1031 exchanges, she provides continuing education credit courses for attorneys, accountants, title insurance agents, and RealtorsÂ®.