I plan to sell a piece of land in MD that has appreciated over the years. Could I acquire a piece of land in Puerto Rico and avoid capital gains via a 1031 Exchange or TIC? Thanks. O.C.
There is a letter ruling (200040017) that provides for including the US Virgin Islands for exchange purposes, based on Section 932 (a) of the Code. Basically, the taxpayer must have taxable income from the US Virgin Islands in order for property there to be included.
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Sorry, exchanging domestic property for foreign property is not allowed under the exchange rules.
You can only exchange domestic for domestic OR foreign for foreign, but not domestic for foreign property.
Last time I checked Puerto Rico was domestic. Am I wrong about this?
Yes, domestic includes all 50 states, but does not include a U.S. Territory such as Puerto Rico.
There is a letter ruling (200040017) that provides for including the US Virgin Islands for exchange purposes, based on Section 932 (a) of the Code. Basically, the taxpayer must have taxable income from the US Virgin Islands in order for property there to be included.
Felip,
You are correct, but his question was regarding Puerto Rico and not the U.S. Virgin Islands.
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from the irs...
Foreign real property is real property not located in a state or the District of Columbia.
so unless there an except, looks like no.
There actually is an exception. See post above regarding U.S. Virgin Islands.
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