1031 exchange for Canadian investors

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1031 exchange for Canadian investors

Joseph Careri
Rental Property Investor · Ontario · Member since 2020 · 13 posts · 0 votes

Hi everyone!


My name’s Joseph and I’m a new investor from Ontario, Canada! I was wondering if anyone knew if there was an equivalent of the 1031 exchange for Canadians that want to sell their properties and buy into another one? I have yet to find anything remotely close and was hoping someone here might have a better idea! Thanks in advance!

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Melanie Dupuis
Investor · North Bay, Ontario · Member since 2019 · 221 posts · 99 votes
5y

@Joseph Careri I wish!!! We need to keep our fingers crossed that the government won't take away our 50% exemption on capital gains. Some of our sources say they are looking at reducing the amount that is not taxed.

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  • Bill ExeterBusiness Member
    1031 Exchange Qualified Intermediary · San Diego, CA · Member since 2008 · 1k+ posts · 1k+ votes
    5y

    Hi @Joseph Careri, 

    Canada does not have anything resembling the 1031 Exchange.  Canadians can do a 1031 Exchange on U.S. Property and defer the payment of their U.S. taxable gain by reinvesting in replacement property also in the U.S.  They would likely be subject to FIRPTA withholding issues that can complicate the timing issues involved in a 1031 Exchange, but you can file for an exemption with the IRS and get the withholding requirement waived if doing a 100% tax-deferred exchange into other U.S. property. 

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  • Joseph Careri
    OP
    Rental Property Investor · Ontario · Member since 2020 · 13 posts · 0 votes
    5y

    Hi @Bill Exeter,


    Thanks for the reply and great insight! I’ll keep that in mind and will definitely have to consider investing in the US so that I can receive some of the same benefits. Hopefully Canada will follow suit some time soon and create the same bylaw.

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  • Hai Loc
    Specialist · Toronto, Ontario · Member since 2012 · 2k+ posts · 891 votes
    5y

    @Joseph Careri

    Will this discourage you to invest in Canada?

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  • Melanie Dupuis
    Investor · North Bay, Ontario · Member since 2019 · 221 posts · 99 votes
    5y

    @Joseph Careri I wish!!! We need to keep our fingers crossed that the government won't take away our 50% exemption on capital gains. Some of our sources say they are looking at reducing the amount that is not taxed.

    1Reply
  • Joseph Careri
    OP
    Rental Property Investor · Ontario · Member since 2020 · 13 posts · 0 votes
    5y

    @Hai Loc never!! It will take a lot to discourage me from investing. I’ve purchased my first investment property over this pandemic when all seemed hopeless and I definitely plan on investing more!


    @Melanie Dupuis it would definitely help Canadian investors and give more incentive for people that are wanting to buy and sell.  Refinance is always an option but sometimes to cash out with a low to no tax sounds like a better plan, especially when you can purchase an even better investment property out of it!

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