Gaucho
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Mexican 1031 Exchange
Does anybody know if it's possible to do a 1031 exchange in Mexico? ie; selling one property in Mexico and rolling the proceeds into another property
in Mexico to avoid capital gains taxes?
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wilderone
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You can use foreign property with a 1031 exchange. All the rules apply. Relinquished property should have a history as an investment or held for
profit (not property for personal use or a vacation home); and the acquired "like kind" property should be for the same purpose -- usually documented
as rentals backed up with income/expenses/ depreciation schedules (unless they're other types of businesses or vacant land - but same business
documentation). Also, the proceeds can't leave Mexico or the transaction monies will be subject to currency conversions. You'll need an intermediary
to do all the paperwork and hold the relinquished sale proceeds to be turned over to the seller of your acquired property. The whole transaction is
reported on your federal returns.
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Gaucho
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Quote: Originally posted by wilderone  | | You can use foreign property with a 1031 exchange. All the rules apply. Relinquished property should have a history as an investment or held for
profit (not property for personal use or a vacation home); and the acquired "like kind" property should be for the same purpose -- usually documented
as rentals backed up with income/expenses/ depreciation schedules (unless they're other types of businesses or vacant land - but same business
documentation). Also, the proceeds can't leave Mexico or the transaction monies will be subject to currency conversions. You'll need an intermediary
to do all the paperwork and hold the relinquished sale proceeds to be turned over to the seller of your acquired property. The whole transaction is
reported on your federal returns. |
So, if you sold vacant land, that was held as an investment and rolled it into an "improved" property that was being used as a vacation rental, that
would work? I understand about having an accommodator.
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CortezBlue
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| Quote: Originally posted by wilderone | | You can use foreign property with a 1031 exchange. All the rules apply. Relinquished property should have a history as an investment or held for
profit (not property for personal use or a vacation home); and the acquired "like kind" property should be for the same purpose -- usually documented
as rentals backed up with income/expenses/ depreciation schedules (unless they're other types of businesses or vacant land - but same business
documentation). Also, the proceeds can't leave Mexico or the transaction monies will be subject to currency conversions. You'll need an intermediary
to do all the paperwork and hold the relinquished sale proceeds to be turned over to the seller of your acquired property. The whole transaction is
reported on your federal returns. |
1031 exchange is an IRS code, so I think you are looking for a similar process in Mexico.
I have heard so many "rules" regarding capital gain, who knows. My neighbors in San Felipe sold there home and because they had lived in Mex for
about 7 years their cap gains were waived.
“Two things are infinite: the universe and human stupidity; and I'm not sure about the universe.”
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BajaNomad
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Thread Moved
8-7-2015 at 07:31 AM |
wilderone
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Vacant land vs. improved property? No - they are not "like kind" properties. As mentioned above, there may be Mexican real estate procedures that
might benefit you for your intentions. Also, I'm assuming your Mexican property to be relinquished has been established as investment property, or
held for profit, vis a vis your US federal income tax documents since acquisition. Much online info and guidelines.
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