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I'm selling a residential rental property in UK and want to purchase a residential rental property in the US, can the 1031 Exchange be applied?

Forum|Forum|7 years ago
June 5, 2019
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Best answer by Coleen3

Unfortunately, no.

What property qualifies for a Like-Kind Exchange?

Both the relinquished property you sell and the replacement property you buy must meet certain requirements.

Both properties must be held for use in a trade or business or for investment. Property used primarily for personal use, like a primary residence or a second home or vacation home, does not qualify for like-kind exchange treatment.

Both properties must be similar enough to qualify as "like-kind." Like-kind property is property of the same nature, character or class. Quality or grade does not matter. Most real estate will be like-kind to other real estate. For example, real property that is improved with a residential rental house is like-kind to vacant land. One exception for real estate is that property within the United States is not like-kind to property outside of the United States. Also, improvements that are conveyed without land are not of like kind to land.

From <https://www.irs.gov/newsroom/like-kind-exchanges-under-irc-code-section-1031>

C

Coleen3Answer

Employee

Unfortunately, no.

What property qualifies for a Like-Kind Exchange?

Both the relinquished property you sell and the replacement property you buy must meet certain requirements.

Both properties must be held for use in a trade or business or for investment. Property used primarily for personal use, like a primary residence or a second home or vacation home, does not qualify for like-kind exchange treatment.

Both properties must be similar enough to qualify as "like-kind." Like-kind property is property of the same nature, character or class. Quality or grade does not matter. Most real estate will be like-kind to other real estate. For example, real property that is improved with a residential rental house is like-kind to vacant land. One exception for real estate is that property within the United States is not like-kind to property outside of the United States. Also, improvements that are conveyed without land are not of like kind to land.

From <https://www.irs.gov/newsroom/like-kind-exchanges-under-irc-code-section-1031>

S

simplemind100Author

Thanks. Not 100% clear. The property in the U.K. Is held for investment and business rental. There is income from this and therefore it is business, no ? It is a 4 bedroom semi detached house. The property I would look to buy in the USA is a 4 bedroom house as well which would be used for investment and rental. So, would this not be classed like for like ? The US purchase would not be for personal use. It would be for rental and as an investment.