ADISA Joins Coalition in Letter to Secretary of the Treasurer in Request to Delay Like-Kind Exchange Deadlines
March 23, 2020
In response to the COVID-19 crisis currently sweeping the nation, real estate associations, including ADISA, are asking that the Treasury Department and Internal Revenue Service take administrative action to help ensure liquidity in real estate markets by delaying deadlines applicable to like-kind exchange that are currently underway. The group believes the deadlines to identify replacement property and/or complete like-kind exchanges should be extended for 120 days or to the last day of the general disaster extension period authorized by an IRS News Release or other guidance, similar to the relief description in section 17 of Rev. Proc. 2018-58 and authorized under Internal Revenue Code 7508A.
The COVID-19 crisis is threatening the ability of real estate investors to complete like-kind exchanges, and unfortunately, the current circumstances make compliance with like-kind exchange reinvestment rules impossible. Identifying properties for trade purposes requires travel and a confidence in both the expected cash-flow stream and the value of potentially acquired property. The undersigned associations are extremely concerned that taxpayers who may have commenced an exchange will be unable to identify a replacement like-kind exchange and/or close on a transaction. Taxpayers, many of whom are small and medium-sized businesses and middle-class investors, should not have to be concerned about the possibility of having to pay significant capital gains taxes because like-kind exchange transaction cannot be completed due to the disruption caused by the coronavirus pandemic.
