How long do you have to replace property after a casualty gain?

The rule in plain terms

Postponing a casualty gain depends on buying replacement property in time. The clock has an unusual shape. It opens on the date the property was damaged, destroyed or stolen, so you can buy replacement property before the insurance check arrives. It closes two years after the end of the first tax year in which you realize any part of the gain. Realizing the gain means receiving reimbursement that exceeds your basis, so the year of the first payment, not the year of the casualty, is what sets the deadline. If you are a calendar-year taxpayer, the last day is always December 31.

Examples from the publication

While on vacation, a calendar-year taxpayer has antique furniture that cost $2,200 stolen. The theft is discovered on July 7, 2025. The insurer investigates and pays $3,000 on January 22, 2026. The first gain is realized in 2026, so the replacement period runs until December 31, 2028, even though the theft was in 2025. In a second example a hurricane destroyed a home in September 2025 and in December 2025 the insurer paid $3,000 more than the adjusted basis. The gain was first realized in 2025, so the deadline is December 31, 2027. The publication adds that if the home had been in a federally declared disaster area, the deadline would have been December 31, 2029. Use the calculator for your own year.

The four-year rule for disaster-area homes

For your main home or its contents located in a federally declared disaster area, the replacement period generally ends four years after the close of the first tax year in which any part of the gain is realized. The same rules cover renters who receive insurance proceeds for property in a rented main home. The disaster-area rules also provide that no gain is recognized on insurance proceeds for unscheduled personal property that was part of the contents, and that the remaining proceeds for the home and its contents are treated as one item, so spending on a replacement home and replacement contents together counts toward postponing the gain. For business or income-producing property in a declared disaster area, any tangible property acquired for use in any business counts as similar or related, wherever it is located.

Asking for more time

You can request an extension of the replacement period, ideally before it ends, although requests are not ordinarily made or granted until near the end. Extensions are usually limited to one year. A high market price or scarcity of replacement property is not sufficient grounds; construction that clearly cannot be finished in time can be. The publication says to fax a written request to 877-477-9193 or mail it to the IRS address it gives, with a cover sheet headed “1033 Extension Request for Replacement Period of Involuntarily Converted Property” and the details of the taxpayer, the property, the payments, the return and the steps taken. A request filed after the period ends can still be considered if you show reasonable cause. Paying a contractor in advance does not count as buying replacement property unless the work is finished before the period ends.

Using the calculator

Enter the calendar year in which the first part of the gain was realized, meaning the year the insurance payment first exceeded your adjusted basis, not necessarily the year of the casualty. Tick the box only if the property is your main home or its contents and it was located in an area the President declared a disaster area. A non-calendar fiscal-year taxpayer should count from the close of that fiscal year instead, since the rule is stated in terms of the close of the first tax year in which any gain is realized.

What happens if you miss it

If you do not replace the property in time, the gain you postponed becomes taxable, so you generally amend the return where you postponed it. See whether a casualty gain is taxable for the gain arithmetic and the 1031 exchange deadline calculator for a related deadline that works differently. A person who dies before replacing the property cannot pass the postponement to the executor; the gain is reported for the year it was realized.

Sources

• IRS Publication 547, Casualties, Disasters, and Thefts (2025): Replacement Period; Extension; Gains Realized on Homes in Disaster Areas. Read November 2, 2026.

Edition read: Publication 547 (2025), for use in preparing 2025 returns. Dollar limits and dates on this page are the figures printed in that edition; legislation enacted after it was published is not reflected, so check the current publication, Form 4684 and its instructions for your tax year. This page summarizes the publication and does not replace it.