Undoubtedly, the current pandemic has damaged the worldwide economy more than the last two coronaviruses. COVID-19 is the third virus in the family of coronaviruses that has made humans look so feeble. However, unlike the previous two viruses, the current coronavirus has hit us more severely. Almost every major country’s economy is reeling at the moment. Stocks, bonds, mutual funds, and shares have reached a record low. Not only lives, but people are losing their jobs in significant numbers. Among others, the real estate sector turns out to be the biggest sufferer. With everyone locked inside their home, the sale and purchase of properties have almost come to a halt. Investors are gradually falling into a financial pit, with many desperately searching options that could help their investment running. If you also find yourself in a no man’s land, a 1031 exchange could see you through the shores.
The Recent IRS Notice 2020-2023 Gives Investors the Time They Need at this Moment
Under normal circumstances, the IRS requires an investor to close a 1031 exchange within 180 days from the sale of their investment property. Once the investment property is sold, you are required to identify a replacement property within 45 days. An investor must complete the identification and close their exchange before the deadlines. Else, that 1031 exchange will no longer be valid because you cannot ask for an extension. However, keeping the present lockdown situation in mind and the amount of damage done to the worldwide economy, the IRS has got some relief for 1031 exchange investors by making some changes in the 1031 exchange timeline.
In a recent notice, the IRS has clearly mentioned that if your identification period or 1031 exchange period is due on or after April 1, 2020, you can close your 1031 exchange on or before July 15, 2020. Basically, the IRS has given the extension it never offers. This decision has surely provided investors much-needed relief. So, if you were worried about how you will identify a property in this complete shutdown situation, you can relax for a bit now.
Do A 1031 Exchange Without Stepping Out of Your Home
Even when you’re locked inside your home, a 1031 exchange is not impossible. You can use a DST investment to close your 1031 exchange. DSTs, as you may now, are prepackaged investment options that qualify as 1031 exchange replacement properties. Plus, DSTs can be closed digitally. So, if you have a buyer for your investment property or you have already sold it, you can initiate a 1031 exchange and keep your investment moving.