Non-US Investing • 1031 for US properties while tax resident in EU country

Hi folks,

I own three rental properties in the US, each is legally owned by separate a separate LLC..

In a couple of years, I plan to move abroad (EU) to FIRE. I plan to retain my US citizenship but will become tax resident in either Spain or Portugal

While I don't plan to sell my properties right now, down the road I probably will and I am trying to identify if there is any way to benefit from 1031 exchange once I'm a tax resident in, say, Spain.

Let's say I purchased a property for $100K sell it for $150K; depreciation is $25K so I have $75K subject to capital gains tax. Let's also say I invest that money in another US-based real estate purchase immediately

Simplifying:
- In the US, I can benefit from 1031 with no issues and avoid paying any capital gains due if I re-invest my proceeds in another real estate purchase
- But then in Spain I would have no tax credit for the capital gains, meaning I need to pay for all the $75K

Can you folks comment on:
- is this understanding correct
- is there any ownership structure that I could change my properties to so that I don't need to report these transactions as pass-through? I am guessing a regular corporation but then I would run into other kind of double taxation (corporate + distributions)

Thanks!

Statistics: Posted by donpatch — Mon Jul 08, 2024 4:29 pm — Replies 0 — Views 81

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