Capital Gains are assessed on gains, so you'll not be taxed on the costs of improvements or costs of sale, as that would not be a gain.You may still be able to exchange this property, but you'll gain the needed clarity by speaking with an exchange company.

Problem is it seems no banks are willing to provide buy-to-let mortgages to foreigners.

You may have to start small build equity and work your way up whether its 1031 exchange or just accumulating more assets..

@Turo Tales depends on your stratgey, however, to defer taxes, you could do a 1035 exchange and reinvest.

IDEAL situation would be to do short term (Airbnb) rental when it is not in use to supplement this luxury but I do realize with zoning laws/subletting and being a foreigner it may be problematic.I will be travelling to Ohau on March 27th - April 4th 2020.

It seems easier to use one person to handle all the exchanges but maybe that is not possible.Finally, whose responsibility is it to make sure all tax rules are followed?  

Well, to Brian, the solution of housing for the humane race is lease to own.Let's not forget the reality, those here are already living somewhere.You are not going to see some great influx of housing leases or purchases, the folks in this casted net are already in the economy.The approach taken by the President is pretty much common sense, the expected or proposed boarder restrictions will most likely offset any greater influx of immigration, there won't be a greater intrusion of foreigners entering, bet my last dollar on that.

@Peter Chu  Try Gary Link. http://www.teamlink.com/He has spoken at the local REIA's here as well as The Learning Exchange on Howe Ave in Sacramento.I've never used him (yet) but I've heard him speak and he's very informative.Mark

I am an American living and working abroad with nontaxable foreign earned income and a flexible job that allows me to work from the US.

Nope it's common to want to close before years end.Is the seller doing a 1031 exchange??