Question: Can I Do A 1031 Exchange With Foreign Property?

As tax season rolls along, I am posting real and of course compelling questions that I will field from clients during the season.  The answer is that yes you can do a 1031 exchange with foreign (non U.S.) property as long as the property you are exchanging to is also non-U.S. property.  A 1031 exchange refers to a section of the tax code that allows the tax-free exchange of investment or business real estate for other investment or business real estate as long as the property received is of like-kind as the property that is given up.  Therefore, in order to meet the definition of "like-kind" foreign property must be exchanged for other foreign property.  1031 exchanges are complicated and must abide certain time constraints in order to qualify.  For more information on the excellent planning tool of 1031 exchanges, this Wikipedia article is a good resource of how the process works.