Can you do a 1031 exchage between Canada and the US. NO!

My question is: Applicable to both US and Canada

QUESTION: If my wife and I purchase a property (Tennent in common) in Victoria B.C. can we do a 1031 exchange from the sale of a commercial building in the U.S.? Thanks for your help.

-------------------------------------------------------- david ingram replies:

No -  You can do a 1031 exchange between two Canadian properties or two US properties or two Mexican properties but not between a US and Canadian property.

However, 'If' the time comes when you might consider selling the Canadian property and buying another Canadian property, do NOT even think of a 1031 exchange.  Canada does not recognize it and you would owe Canada Tax.  You should pay the Canadian tax and claim it as a foreign tax credit on schedule 1116 of your US return at the time. That will increase your ACB (adjusted cost base) for the future.

Remember you need to fill in Form NR-6 BEFORE the first rent and have a Canadian Resident sign it for you.  See another Q & A that will be coming withim 24 hours dealing with this. �