Selling in UK, buying in US. 1031 an option?

[Alex Miles]

Hi, need some advice!

Next spring I will be putting my flat in London on the market. I bought it in 2010 with a mortgage (a private loan from a friend) the price has almost doubled by now, and as I got married to an American in 2011 - I have been here in Atlanta most of the time since then. The flat has been rented out for the past year and a half.

I would like to sell it and buy rental property here. 

I have an ITIN, but no Social Security number as Immigration just delay and delay. I can't put my life on hold any longer, and I always file jointly for taxes with my partner, if that helps.

I heard about the 10% witholding, and that it can be avoided if necessary, but I don't know how I'd go about rolling the sale of a UK property to another person in the UK when I think, for a 1031, it has to go via an intermediary who, I'm guessing, is in the US.

[Mark Creason]

Originally posted by @Bill Exeter:

Hi @Alex Miles,

The majority of investors/taxpayers do not realize that foreign property can qualify under Section 1031, but the exchange has to be between foreign properties.  You can sell and 1031 Exchange foreign property as long as you reinvest in other foreign property otherwise it would not be considered like-kind property for 1031 Exchange purposes. 

There are many nuances involved in the administration of a 1031 Exchange in a foreign country because no other country has the 1031 Exchange or understands how it works.  It takes an experienced Qualified Intermediary who understands the differences and knows how to works with the local laws, regulations and customs. 

If he is a UK citizen, would a 1031 exchange help him.  How do you avoid foreign taxes if you do a 1031 exchange?

Mark