The only exception to the 12-month reinvestment of sales proceeds rule is a delay caused by a federally declared disaster. There is no exception for a delay caused by government actions.
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What happens If the reinvestment of the proceeds is delayed because I have to wait for government actions?
Will the delay cause a failure of the 12-month requirement?
Answers
Unlike with the Working Capital Safe Harbor, the 12-month reinvestment does not have extensions for governmental action or inaction affecting the transaction. The best you can hope for on that is relief in the form of an IRS Notice, like there was with coronavirus.
The regulations provide a safety net for those cases, but really it does not explain how and for how long. It is interpreted that it may extend for as long as the government action takes place.
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