real estate 1031 Exchange no

Sent: Wednesday, October 18, 2006 11:53 PM
Subject: USA real estate 1031 Exchange no good for Canadian - David Ingram gives expert income tax & immigration help to non-resident Americans & Canadians from New York to California to Saudi Arabia to Mexico to China or Chile - Cross border, dual citizen - out of
Good day Mr. Ingram,
I am one of the participants in Ozzie Jurock's seminars. I asked him the following question and he referred me to you.
We are considering buying a water front lot in Florida. Is there a way for a Canadian resident to be able to apply the 1031 regulation for capital gain tax free exchanges in the future? Would you have to form and operate a US corporation?
Thanks, Melody
david ingram replies:
Whatever you do - NO US Corporation.
The following Q & A might help you.
Is the 1031 available to Canadian Investors , who would like to trade up for another revenue property?   
Thank you in advance
david ingram replies:
A 1031 exchange used to work for Americans in Mexico and Canada but that was stopped a dozen years ago.  Today, For US purposes, a 1031 exchange can only be between two US properties, Two Canadian Properties or Two Mexican properties.
There is nothing to stop a Canadian or even an Ethiopian from using a 1031 exchange in the US.  However, although I do NOT know the rules for Ethiopia, I DO know the rules for Canada.
Canada will NOT recognize the 1031 exchange and the Canadian will be taxable in Canada while not being taxable in the USA at the time.  It just does not work because later on, when the exchanged property or even another 1031 exchanged property is finally sold in the US, he or she will now owe US tax and it will be too late to claim any credit in CANADA.  No Canadian should participate in a US 1031 exchange.
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