
There exists an extremely powerful wealth-building method that has actually been around considering that 1921, and is still used by the country's most smart real estate investors. Remarkably, the IRS made this tax deferral possible.
Simply put, you can delay (possibly permanently, if you meet a certain condition which I'll share in a minute) capital gets taxes on the benefit from the sale of a foreign home if you use the proceeds of the sale to buy another foreign property.
I've helped individuals perform these kinds of exchanges (Section 1031 or "like kind " exchanges) for the past 6 years. I can assist you, too, but initially, a couple of caveats:
1. You can't exchange U.S. real estate into foreign real estate. This provides some confusion, probably going back to a time prior to "like kind " residential or commercial property was plainly defined and codified by the IRS.

Although there have actually been cases where a 1031 exchange of U.S. property for foreign property has been performed when the replacement residential or commercial property was in Puerto Rico or the U.S. Virgin Islands, the cold difficult truth is that today you can not 1031 exchange U.S. property for foreign property in most parts of the world.
2. Unless you carry out a 1031 exchange, Uncle Sam will be sitting calmly at the closing table with you waiting for his 15% share of the profits, whether the real estate being sold is in Paris, San Miguel de Allende, or Buenos Aires.
Please keep in mind that you must 1031 exchange the whole earnings of the sale (less selling expenses), not just the revenue or there will be "money boot, " and taxes due. Even more, if you have a mortgage on the property being exchanged you are required to have a mortgage (for an equal or higher amount) on the new home to prevent "home mortgage boot ".

Fortunately
If you 1031 exchange foreign home it does not need to be in the exact same nation to meet the "like kind " requirement. For example, you could 1031 exchange the profits of a sale from a Paris condo into beachfront property on Roatan.
Plus, you can 1031 exchange a single foreign property for multiple foreign properties ... or 1031 exchange several foreign properties for a single foreign home-- so long as the exchange is well balanced, i.e. the value of all "relinquished property " is equal to or higher than the worth of all "replacement residential or commercial property. " So, you could, after 10 years of shrewd purchasing, sell your Paris apartment, Roatan beach home, and Cancun beachfront lot, all worth a total of $1.5 million ... and exchange the proceeds for a charming $1.5 million Tuscany rental property complete with vineyard (or visa versa) ...
and postpone the capital gains tax you would otherwise owe Uncle Sam.
Keep in mind when I stated there was one condition that would allow you to delay the capital gains tax permanently? Well, it's excellent news for your beneficiaries-- that "condition " is when you pass away. At that point, your beneficiaries will inherit your home on a "stepped up basis " significance at "fair market price at the time of you death. " Ergo, no capital gets taxes will be paid by them (although they might owe estate tax).
Used properly, 1031 exchanging can get rid of equity shrinkage when you offer a property, therefore providing you more cash to purchase your next property. This can be repeated again and again, till your beneficiaries inherit the property and pay no taxes for your 1031 exchange activities.
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