1031 Question - Multiple Properties

Hi



I am looking at selling a property I own overseas. That is worth a reasonable amount



Can I sell it and 1031 exchange into multiple less expensive properties?



If say for example I have $100k equity in it, I could buy 4 investment duplexes....

Comments(11)

  • InvestorGuyTN16th November, 2006

    Good. Thank you

    I was actually more concerned however about the single property proceeds being transferred into multiple properties....

    Do you know if this is possible?

  • ctsee1116th November, 2006

    There are some interesting ways you can plan your exchange. For instance, you can sell your property to one party and buy your replacement property from another. You can sell one property and buy two, three or more replacements! Here is a good example: if you sell a $450,000 waterfront lot you can buy a $50,000 condo rental, a $100,000 parcel of raw land as an investment, a $150,000 duplex, and a $200,000 commercial building, and PAY NO TAXES!

    See http://www.instantinc.us Real Estate Investing Section

    Email me your phone number and I will be happy to discuss with you.[ Edited by ctsee11 on Date 11/16/2006 ]

  • InvestorGuyTN16th November, 2006

    thats what I wanted to hear

    I will be selling one apartment, making a 80k profit and using this as the rest of the downpayment on some less expensive investment properties that I currently hae lease options on...

  • ctsee1117th November, 2006

    Quote:
    On 2006-11-16 12:21, InvestorGuyTN wrote:
    thats what I wanted to hear

    I will be selling one apartment, making a 80k profit and using this as the rest of the downpayment on some less expensive investment properties that I currently hae lease options on...


    Glad I could help

  • wexeter18th November, 2006

    Yes, there is essentially no limit on the number of properties that you can exchange out of or into. The more involved of course the more challenging the transaction.
    [addsig]

  • InvestorGuyTN18th November, 2006

    perfect

    thanks so much for the assistance

    if I was going to excahnge out of 1 property overseas and exchange into 4 properties in the Usa could anyone gove me a ball park on how much that would cost?

  • NewKidInTown318th November, 2006

    An exchange of foreign property for domestic property is not permitted under the 1031 rules. Instead the sale of your foreign property will be a taxable event in your scenario.

  • wexeter18th November, 2006

    You can only exchange domestic for domestic and foreign for foreign, but can not exchange between domestic and foreign properties.
    [addsig]

  • InvestorGuyTN19th November, 2006

    can you give me a source for that please?

    That would be very annoying, to have to pay capital gains tax...

  • wexeter22nd November, 2006

    I would be happy to.

    The exchange of foreign property for domestic property was permitted up until the Revenue Reconciliation Act of 1989.

    This act eliminated the ability to exchange between foreign and domestic assets by amending Section 1031 of the Internal Revenue Code.

    The specific citation is Section 1031(h)(1), which reads:


    (h) Special rules for foreign real and personal property --

    For purposes of this section --

    (1) Real property.--Real property located in the United States and real property located outside the United States are not property of a like kind.

    _________________
    Bill Exeter[ Edited by wexeter on Date 11/22/2006 ]

  • wexeter25th November, 2006

    I completely understand. The problem with the original text is that investors would exchange out of the US and into countries that we did not have any tax treaties with. The next sale by the investor was completely tax free of U.S. income taxes. The change was designed to eliminate the abuse. They should have allowed exchanges into the U.S. but not out of the U.S.
    [addsig]

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