Interestingly, foreign property cannot be 1031 exchanged for US property. The code specifically says that foreign property is not like-kind to US property. But remember, US taxpayers are taxed on their gains from wherever they’re derived, including foreign transactions. So if you’re a US taxpayer selling foreign real estate you can still do a 1031 exchange on your foreign real estate, but you can’t exchange into the US. So you would have to do a foreign property to foreign property exchange. For example, if you sold a property in the UK you could buy your replacement property in Canada or Mexico, but you could not buy the replacement property in Minnesota because the US property would not be considered like-kind to the UK property.
Start Your 1031 Exchange: If you have questions about 1031 exchanges, feel free to call me at 612-643-1031.
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