Maximize Returns, Defer Taxes — Even as a Foreign Investor

If you’re a non-US resident investing in US real property, a properly structured 1031 exchange can be a powerful strategy to defer capital gains taxes when selling and reinvesting in other US real estate. Under Section 1031 of the Internal Revenue Code, foreign investors may defer tax on gains from the sale of US real estate by reinvesting the proceeds into a “like-kind” US property.

Key Benefits:

• Tax Deferral: Avoid immediate capital gains taxes on the sale of US property by rolling your investment into another qualifying property.
• Wealth Accumulation: Grow your US real estate portfolio more efficiently through tax-deferred reinvestment.
• Estate Planning Strategy: Properly structured exchanges may help manage US estate tax exposure.

Important Considerations for Non-US Residents:

• Only US Property Qualifies: Both the relinquished and replacement properties must be located within the United States.
• FIRPTA Compliance: Proceeds from the sale of US real property by a foreign person are subject to withholding under the Foreign Investment in Real Property Tax Act (FIRPTA).
• Strict Timelines & Rules: You must identify potential replacement properties within 45 days and close within 180 days. A qualified intermediary must facilitate the exchange.
• Qualified Intermediary: To ensure the exchange qualifies under Section 1031, you must work with a Qualified Intermediary (QI), an independent third-party intermediary to facilitate the transaction.
• Legal and Tax Structuring: Entity ownership, treaty benefits, and residency status all impact the exchange strategy and tax treatment.
• Tax Rates: Differing your capitals gains may mean paying a higher tax rate if the Capital Gains Tax rate increases, or exemptions are reduced during the total investment ownership period.

How We Help:

Our firm specializes in advising non-US investors on the complex rules surrounding 1031 exchanges. We coordinate with real estate attorneys, intermediaries, and tax professionals to ensure compliance with US tax law, minimize withholding, and structure transactions that align with your long-term investment goals.

Ready to make your next move tax-efficient?
Contact us to explore how a 1031 exchange can benefit your US real estate investments.