What Changed in September 2026 for 1031 and DST Investors

This digest covers September 1 to September 30, 2026, plus the items that took effect on October 1. No new statute, regulation or revenue procedure changed section 1031 itself this month. What did change: three new disaster releases that can move exchange deadlines, a one-year postponement for taxpayers affected by the conflict in Israel, extended drought relief for livestock sales, proposed rules on the new farmland installment election, and the close of the first opportunity zone nomination window. We list only items we confirmed on a primary source.

Disaster relief: three new releases, three expirations

The IRS issued three disaster releases in September, each giving affected taxpayers until February 1, 2027:

• IN-2026-01 on September 2, for 21 Indiana counties hit by storms that began August 11, 2026.
• HI-2026-03 on September 10, for the Hawaii County earthquake that began May 22, 2026.
• SD-2026-02 on September 10, for the Oglala Sioux Tribe, storms beginning June 2, 2026.

Three earlier releases, for the Crow Tribe, the Fort Peck Assiniboine and Sioux Tribes and the San Carlos Apache Tribe, reached their September 28, 2026 end date. Under section 17 of Rev. Proc. 2018-58, a 45-day or 180-day deadline that falls on or after a disaster’s start date can move by 120 days or to the end of the release period, whichever is later, if the relinquished property closed before the disaster. The full list of releases still running, with counties and a worked example, is in our September 2026 disaster relief post.

On September 3 the IRS also issued IR-2026-104, a reminder to keep copies of tax and property records before a disaster. For an exchanger that means the exchange agreement, the identification letter and both purchase contracts.

A one-year postponement tied to the conflict in Israel

On September 30, IR-2026-116 announced Notice 2026-63. It gives affected taxpayers in Israel, the West Bank and Gaza until September 30, 2027 for returns, payments and the time-sensitive acts listed in Reg. section 301.7508A-1(c)(1) and Rev. Proc. 2018-58, where those acts fall due from September 30, 2026 to September 30, 2027. It follows Notices 2023-71, 2024-72 and 2025-53. A US investor whose exchange depends on a party or records in the covered area should read the notice and call the number it lists, (866) 562-5227.

Drought relief for livestock sold under section 1033(e)

On September 15, IR-2026-110 released Notice 2026-54, which lists counties in 49 states, the District of Columbia, Puerto Rico and other areas that reported exceptional, extreme or severe drought during the 12 months ending August 31, 2026. The relief applies to livestock held for draft, dairy or breeding and sold because of drought. The usual replacement period is extended to four years, and for qualifying areas the release says sellers whose period was set to expire at the end of 2026 now have until the end of their next tax year. This is a section 1033 rule, not section 1031, but farm families weighing both should read our guide to 1031 for farm and ranch families.

Proposed rules for the farmland installment election

On September 28, IR-2026-115 announced proposed regulations under section 1062, which Public Law 119-21 added for sales in taxable years beginning after July 4, 2025. If you sell qualifying farmland to a qualified farmer, you can elect to pay the tax on the gain in four equal annual installments, 25% each, starting with the regular due date of the return for the year of sale. The land must have been farmed by you or leased to a qualified farmer for substantially all of the prior 10 years, it must carry an enforceable restriction keeping it in farming for 10 years after the sale, and the buyer must be an individual actively engaged in farming. Comments are due November 30, 2026. This spreads the tax; an exchange defers it. Compare both with your CPA before a farmland closing.

October 1: the IRS interest rate and a New York City rent order

IR-2026-98, issued in August under Rev. Rul. 2026-15, keeps the individual underpayment and overpayment rate at 7% for the quarter that began October 1, 2026. That is the rate on any tax you owe late, including tax from a failed exchange.

For owners of rent-stabilized buildings, the New York City Rent Guidelines Board adopted 0% increases on June 25, 2026 for one-year and two-year leases commencing from October 1, 2026 through September 30, 2027. Our rent control post covers what that does to a hold-or-sell decision. We did not find another state or local change taking effect October 1, 2026 that touches exchanges and that we could confirm on an official source, so none is listed here.

Opportunity zones and the 2027 numbers

Rev. Proc. 2026-14 sets the 90-day nomination window that began July 1, 2026, the first decennial determination date. That window closed at the end of September unless a governor requested the 30-day extension, which runs no later than October 28, 2026. Treasury then has 30 days to certify, with a possible further 30. The new zones apply from January 1, 2027; see opportunity zone designations for 2027.

As of September 30 the IRS had not released the 2027 inflation adjustments. Last year’s came on October 9, 2025 with IR-2025-103. Our 2027 inflation adjustments post lists what will move.

No Tax Court opinion issued in September turned on section 1031. The rulings that did, in 2025 and 2026, are in our Tax Court rulings roundup. One tenant event closed the month: a pool supply retailer filed for chapter 11 on September 30 after closing about 76 stores, covered in our fall 2026 tenant credit watch.

What to do now

1. If your sale closed in 2026, check the disaster table against every party to your exchange, not just the property.
2. If you own farmland, ask your CPA to model the section 1062 election against an exchange before you sign a contract.
3. If tax from a sale is unpaid, the 7% rate runs daily; a proposal can show whether a DST can still close inside your window.

Sources

• IN-2026-01, Indiana disaster relief (September 2, 2026)
• HI-2026-03, Hawaii County earthquake relief (September 10, 2026)
• SD-2026-02, Oglala Sioux Tribe relief (September 10, 2026)
• Rev. Proc. 2018-58
• IR-2026-104, disaster preparedness and tax records (September 3, 2026)
• IR-2026-116, Israel relief (September 30, 2026)
• Notice 2026-63
• IR-2026-110, drought livestock relief (September 15, 2026)
• IR-2026-115, section 1062 proposed regulations (September 28, 2026)
• IR-2026-98, interest rates for the fourth quarter of 2026
• NYC Rent Guidelines Board, adopted guidelines 2026-27
• 26 U.S.C. section 1062
• Rev. Proc. 2026-14, opportunity zone nominations
• IR-2025-103, 2026 inflation adjustments (October 9, 2025)