In recent months, the commercial real estate market has faced a new challenge: rising insurance costs. As recent disasters impact communities across the country, it’s vital for our clients and partners involved in 1031 exchanges to stay informed about important tax relief provisions announced by the IRS. These provisions specifically address the 45-day and 180-day deadlines for Affected Taxpayers in various disaster-affected areas, including Florida, the Virgin Islands, Connecticut, New York, Pennsylvania, Illinois, Tennessee, Virginia, Alabama, South Carolina, North Carolina, and Georgia.
Florida Tax Relief
In Florida, the IRS has implemented several key updates:
- Hurricane Milton (Effective October 5, 2024):
- Covered Areas: Collier, Columbia, DeSoto, Duval, Flagler, Gilchrist, Glades, Hamilton, Hardee, Hendry, Hernando, Highlands, Hillsborough, Indian River, Lafayette, Lake, Lee, Levy, Madison, Manatee, Marion, Martin, Miami-Dade, Monroe, Nassau, Okeechobee, Orange, Osceola, Palm Beach, Pasco, Pinellas, Polk, Putnam, Sarasota, Seminole, St. Johns, St. Lucie, Sumter, Suwannee, Taylor, Union, and Volusia counties.
- General Postponement Date: May 1, 2025.
- Individuals and businesses in six counties (Broward, Indian River, Martin, Miami-Dade, Palm Beach, and St. Lucie) that previously did not qualify for relief under either Hurricane Debby or Hurricane Helene will receive disaster tax relief beginning October 5, 2024, and concluding on May 1, 2025.
- Individuals and businesses in 20 counties (Baker, Brevard, Clay, DeSoto, Duval, Flagler, Glades, Hardee, Hendry, Highlands, Lake, Nassau, Okeechobee, Orange, Osceola, Polk, Putnam, Seminole, St. Johns, and Volusia) previously receiving relief under Hurricane Debby, but not Helene, will receive disaster tax relief under Hurricane Milton from August 1, 2024, through May 1, 2025.
- Hurricane Helene (Effective September 23, 2024):
- Covered Areas: Alachua, Bay, Bradford, Calhoun, Charlotte, Citrus, Collier, Columbia, Dixie, Escambia, Franklin, Gadsden, Gilchrist, Gulf, Hamilton, Hernando, Hillsborough, Holmes, Jackson, Jefferson, Lafayette, Lee, Leon, Levy, Liberty, Madison, Manatee, Marion, Monroe, Okaloosa, Pasco, Pinellas, Santa Rosa, Sarasota, Sumter, Suwannee, Taylor, Union, Wakulla, Walton, and Washington counties.
- General Postponement Date: May 1, 2025.
- Note: Tax deadlines remain February 3, 2025, for areas that received Debby-related relief but not Helene-related relief.
Other Affected Areas
In addition to Florida, the following states have also been designated for relief:
- Virgin Islands (Effective August 13, 2024):
- Covered Areas: St. Croix, St. John, St. Thomas, and Water Island.
- General Postponement Date: February 3, 2025.
- Connecticut (Effective August 18, 2024):
- Covered Areas: Fairfield, Litchfield, and New Haven counties.
- General Postponement Date: February 3, 2025.
- New York (Effective August 18, 2024):
- Covered Areas: Suffolk County.
- General Postponement Date: February 3, 2025.
- Pennsylvania (Effective August 9, 2024):
- Covered Areas: Lycoming, Potter, Tioga, and Union counties.
- General Postponement Date: February 3, 2025.
- Illinois (Effective July 13, 2024):
- Covered Areas: Cook, Fulton, Henry, St. Clair, Washington, Will, and Winnebago counties.
- General Postponement Date: February 3, 2025.
- Tennessee (Effective September 26, 2024):
- Covered Areas: Carter, Cocke, Greene, Hamblen, Hawkins, Johnson, Unicoi, and Washington counties.
- General Postponement Date: May 1, 2025.
- Virginia (Effective September 25, 2024):
- Covered Areas: City of Bedford, Bland, Bristol City, Buchanan, Carroll, Covington City, Craig, Danville City, Dickenson, Galax, Giles, Grayson, Montgomery, Norton City, Pittsylvania, Pulaski, Radford, Russell, Scott, Smyth, Tazewell, Washington, Wise, and Wythe counties.
- General Postponement Date: May 1, 2025.
- Alabama (Effective September 22, 2024):
- Covered Areas: Entire state of Alabama.
- General Postponement Date: May 1, 2025.
- North Carolina (Effective September 25, 2024):
- Covered Areas: Entire state of North Carolina.
- General Postponement Date: May 1, 2025.
- South Carolina (Effective September 25, 2024):
- Covered Areas: Entire state of South Carolina.
- General Postponement Date: May 1, 2025.
- Georgia (Effective September 24, 2024):
- Covered Areas: Entire state of Georgia.
- General Postponement Date: May 1, 2025.
Relief Options Available
Affected Taxpayers may choose between two relief options under Rev. Proc. 2018-58:
- Option One: General Postponement under Section 6 of Rev. Proc. 2018-58 (Affected Taxpayers only)
- Any 45-day deadline or 180-day deadline (for either a forward or reverse exchange) that falls on or after the disaster date is postponed to the General Postponement Date.
- The General Postponement applies regardless of the date the Relinquished Property was transferred (or the parked property acquired by the EAT) and is available to Affected Taxpayers regardless of whether their exchange began before or after the disaster date.
- Option Two: Section 17 Alternative
- This option is available to Affected Taxpayers and other taxpayers who have difficulty meeting exchange deadlines. Conditions constituting “difficulty” are detailed in Rev. Proc. 2018-58, Section 17.
- This option is only applicable if the relinquished property was transferred (or the parked property was acquired by the EAT) on or before the disaster date. Any 45-day or 180-day deadline that falls on or after the disaster date is extended to the longer of:
- 120 days from such deadline, or
- the General Postponement Date.
Definitions and Recommendations
- The Covered Disaster Area includes the counties listed above.
- An “Affected Taxpayer” is defined as individuals who live, and businesses whose principal place of business is located in the Covered Disaster Area. Affected Taxpayers are entitled to relief regardless of where the relinquished property or replacement property is located. Affected Taxpayers may choose either the General Postponement relief under Section 6 OR the Alternative relief under Section 17 of Rev. Proc. 2018-58. Taxpayers who do not meet the definition of Affected Taxpayers do not qualify for Section 6 General Postponement relief.
We encourage all clients to consult with their CPA or tax advisor to determine whether they qualify for any extensions and to understand their new deadlines.
For ongoing updates and detailed information on the covered areas and specific deadlines, please check the IRS disaster website regularly.
Stay Informed
As the situation continues to evolve, we will keep you updated on any further developments regarding tax relief provisions. If you have any questions or need assistance, please do not hesitate to reach out to our team at Peak Commercial.
Have questions?
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