FACTS: The Exchanger, who lives in Idaho, has closed on its Nevada Relinquished Property ( an investment rental home valued at $350,000) on August 1, 2017. The Exchanger has timely identified its possible Replacement Property, before the 45th day for identifying has expired. Its 45th day for Identification purposes was September 15, 2017. In fact, the exchanger identified its possible Replacement Property on September 5, 2017. Exchanger lives in Idaho and the Relinquished Property he just sold was in Nevada. The 3 properties he identified as possible Replacement Properties were in Nevada and California. The Qualified Intermediary, Liberty 1031, LLC is based in Miami, Florida. Hurricane Irma hits South Florida on September 10, 2017. The Exchanger would like to obtain an extension to file its Identification Statement and an extension on closing on the Replacement Property(ies) because the Qualified Intermediary got “hit” by Hurricane Irma. Please remember, neither the Exchanger nor any of the possible Replacement Properties involved were in South Florida. Did the Exchanger qualify for an extension? See Below.
LESSONS LEARNED: A taxpayer who transferred its relinquished property on or before the date of the federally declared disaster qualifies for a postponement under Rev Proc 2007-2008, Section 17 if it is an “affected taxpayer”. An “affected taxpayer” for Section 1031 purposes is one where the replacement property is located in a covered disaster area; the principal place of business of any party to the transaction (for example the settlement agent or attorney, financial institution, or Qualified Intermediary) is located in the covered disaster area; etc. In this particular example, a taxpayer who lives in Idaho identified possible Replacement Properties in Nevada and California. But the Qualified Intermediary (Liberty 1031, LLC) was based in Miami, Florida and in fact, was located in the covered disaster area. All of Liberty 1031, LLC’s clients, qualified for an extension. Personally, I hated the aftermath of Hurricane Irma. For that matter, I hate the devastation that any hurricane brings to anyone. BUT, all of Liberty 1031’s clients were able to benefit by receiving extensions, so there is some good news that can come from hurricanes or other types of qualifying disasters.