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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 10103
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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I have a deal that I want to make with a property in Miami

Customer Question

I have a deal that I want to make with a property in Miami and will require tax assistance. Basically the deal will be a swap of a property in Miami that the seller has for an overseas property in Colombia that I have. I know how it works if the two properties are in the US but not sure if one property is in the US and the other one overseas. Could you please let me know if you could help me and the tax implications? I am a US citizen and the seller is foreigner. There will be no exchange of money as the two properties will be the same value according to what we agreed
Submitted: 3 months ago.
Category: Tax
Expert:  Lane replied 3 months ago.

Hi. My name is***** can help you here.

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I'm so sorry, but if you're looking to do am IRC §1031 exchange, "foreign situs property" as IRS calls it is disqualified.

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Here's the guidance on this:

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From there(I'll unerline the pertinent part): https://www.irs.gov/uac/like-kind-exchanges-under-irc-code-section-1031

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"Both properties must be similar enough to qualify as "like-kind." Like-kind property is property of the same nature, character or class. Quality or grade does not matter. Most real estate will be like-kind to other real estate. For example, real property that is improved with a residential rental house is like-kind to vacant land. One exception for real estate is that property within the United States is not like-kind to property outside of the United States. Also, improvements that are conveyed without land are not of like kind to land."

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This doesn't mean, however, that you can't simply swap the property as a barter exchange.

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IRS taxes this as they do any other net increase in wealth. if you swap a property that has a value of $1MM for a property that has a value of, say, $800K, you will Both parties must report the gain in fair market value of the product or service tyou get as income on your tax return.

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You can see the IRS guidance on this here:https://www.irs.gov/uac/bartering-income-the-value-of-property-or-services-you-receive

Expert:  Lane replied 3 months ago.

Please let me know if you have any questions at all, before rating me

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If this HAS helped, and you DON’T have other questions … I'd appreciate a positive rating (using the stars or faces on your screen, and then clicking “submit")

Otherwise I’m working for no crediting at all here

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Thank you!

Lane

I hold a law degree, (Juris Doctorate), with concentration in Tax Law, Estate law & Corporate law, an MBA, with specialization in financial accounting & tax, a BBA, and CFP & CRPS designations, as well - I’ve been providing financial, Social Security/Medicare, estate, corporate, non-profit, and tax advice, since 1986.

Expert:  Lane replied 3 months ago.

Hi,

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I’m just checking back in to see how things are going.

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Did my answer help?

If this HAS helped, and you DON’T have other questions … I'd appreciate a positive rating (using the stars or faces on your screen, and then clicking “submit")

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But again, let me know if you need more here.

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Lane