real estate swap rules

[beachfront]

i am buying some land in the d.r. and want to exchange with the owner ,who is in florida ,some property i have in florida. can this be done and if not can they incorporate in the states and put the property in a corporations name and then can i exchange with them.

[JRR]

Originally Posted by beachfront

i am buying some land in the d.r. and want to exchange with the owner ,who is in florida ,some property i have in florida. can this be done and if not can they incorporate in the states and put the property in a corporations name and then can i exchange with them.

It may be possible if the proeprty here is an investment property, otherwise there will be tax. Here is a website that may be able to answer your questions:


Welcome to The 1031 Exchange Experts

Jay

[Fabio J. Guzman]

There all sorts of variables here that should be taken into account: Dominican corp. vs. non-Dominican Corp, contribution in kind vs. direct conveyance; Dominican taxes, U.S. taxes, etc. You should obtain professional advice both here and in the US.

[playacaribe2]

Originally Posted by beachfront

i am buying some land in the d.r. and want to exchange with the owner ,who is in florida ,some property i have in florida. can this be done and if not can they incorporate in the states and put the property in a corporations name and then can i exchange with them.

As Fabio has rightly pointed out, there are a multitude of considerations that need to be taken into account in both countries, i.e. how the property is held (corp./non corp.), number of owners, tax considerations in both countries, and, of course, title issues/title insurance to name just a few.

One thing I personally would not do is put Dominican property in a U.S. corporation. That may well trigger heightened I.R.S. scrutiny and will cause you unnecssary expense and reporting requirements in the U.S.

The 1031 tax free exchange JRR references to is named after that section of the Internal Revenue Code. It is not available for properties outside of the U.S. It is available in U.S. territories, i.e., U.S. Virgin Islands and also Puerto Rico.

Look at the entire transaction carefully and consult with qualified counsel in both countries.


Respectfully,
Playacaribe2

[beachfront]

thanks and the part that limits what properties are eligible is what i am concerned about. so my question then is if the property is put into a us corporation a llc, let's say.would that property be eligible for exchange with a usa property. a tough one i think, but its what may make my deal work.

[playacaribe2]

Originally Posted by beachfront

thanks and the part that limits what properties are eligible is what i am concerned about. so my question then is if the property is put into a us corporation a llc, let's say.would that property be eligible for exchange with a usa property. a tough one i think, but its what may make my deal work.

Beachfront:

You can exchange literally any property you want, but it will not be a tax free exchange according to I.R.C. section 1031 regardless if a U.S. corp owns it. It is the locus of the property that matters. In this instance one of the properties is in the D.R.

Now, if you want to just exchange properties and not use section 1031, then you need to hire qualified counsel in both countries, as well as consult with your accountant in the U.S for all those reasons previously stated above.


Respectfully,
Playacaribe2

[beachfront]

thanks. i'll see into it