Can the sale of a property in Puerto Rico be included in 1031 (US / Pennsylvania)

[Matthew Morrow]

We have clients who will be selling some real estate in Puerto Rico, and they would like to reinvest the profits into a property in specifically Pennsylvania.  will they be able to participate in a 1031 or similar program with the gains on that real estate in Puerto Rico? And if so, what if any regulations apply

Thanks! 

[Dave Foster]

@Steve K., thanks for that shout out.  @Matthew Morrow  I just answered your PM.  But this might be good info for all.  Strange as it may seem, you can exchange from the US to anywhere else in the US including, the USVIs, Guam, and the Northern Marianas Islands (Because they are considered "coordinated territories").  Puerto Rico is considered a "protectorate" and because of how the treaty is worded does not qualify for 1031 treatment.

However Puerto Rico and the US share the opportunity zone classification.  So there may be some opportunities there to obtain some tax relief.  There is an article we wrote on this located on our website.  I can't post it here.  But am happy to forward to anyone who requests via PM.