Question:
“Can I do a 1031 exchange from my San Diego rental into a property in Italy, or can I only exchange for something in the U.S.?”
Answer:
You can only exchange your San Diego property for another investment property in the U.S., or possibly U.S. territories or U.S. possessions.
Temporary Regulations issued in 2005 (T.D. 9194) permitted exchanges, under some circumstances, of real estate in the United States with property in the U.S. Virgin Islands, Guam and the Northern Mariana Islands.
In researching this, I learned something new: You can exchange foreign property for like-kind foreign property.
There may be other rules and certain state exceptions may apply, so consult with your legal and/or tax advisor.
