Optimize taxes when selling property overseas

[Adam Kuszczak]

Hi,

I wanted to ask if anyone knows any tax strategies to optimize amount of tax paid on capital gains from selling property in Europe. There is no tax on gain from it in Europe, so I would be only subject to long term capital gain tax (15% or 20%). From what I read, 1031 is not possible when exchanging foreign to domestic (I would foreign to foreign, but that is not what I want).

Not looking for exact solution, just where to poke to find it. Maybe some weird strategy with moving it to Corp or sth. Yes, I will go talk to CPA, just need to find one that can handle it and not just first on the google maps.

Thank you

[Linda Weygant]

Hi @Adam Kuszczak

This is a great question.  As you indicate, you cannot 1031 Foreign to Domestic, but you can 1031 Foreign to Foreign or Domestic to Domestic.

If the country you're selling out of allows for an Installment Sale, that can be a fantastic way to either spread the tax across multiple years and/or strategically structure the sale such that no tax is paid at all (depending on specific facts and circumstances - doesn't always work, but when it does, it's delicious!!)

Generally speaking, putting real estate into an entity in Europe only complicates issues - I've never really seen it simplify things or save on a tax scenario, but that may be dependent on which European country you're talking about.

Best of luck to you!