Am exploring the possibility of

�� Have you already identified the property in Italy that you would like to swap your property in California with?

Thanks for your response. We are looking at several possibilities as we have a potential "exchanger" in California wanting an �� property near us. Have briefly looked at some sites explaining �� internal process, however have not seen anything yet that describes process between two countries, one of which is non-EU. Have just started research on the subject. Part of the exercise is to determine if the exchange would qualify the US exchanger for a "1031 Tax Deferred Exchange" in the US tax code. Have some work to do to see if there is any viability to the exercise.Fred

��It is certainly not usual to offer an Exchange of properties, most people when they sell want money – it is certainly more complicated if they are offered another property on the other side of the world. It will also be a method that offers less security to the seller or exchanger as the �� law will not be written to take into consideration such situations.Certainly it will be a lot easier for your friend to sell the property in the U.S. and then with the money from the sale come to Italy and buy another property. An exchange seems to be asking for problems even if it does solve some tax problems.Best regards,,Conor

It is certainly not usual to offer an Exchange of properties, most people when they sell want money – it is certainly more complicated if they are offered another property on the other side of the world. It will also be a method that offers less security to the seller or exchanger as the �� law will not be written to take into consideration such situations.Certainly it will be a lot easier for your friend to sell the property in the U.S. and then with the money from the sale come to Italy and buy another property. An exchange seems to be asking for problems even if it does solve some tax problems.Best regards,,Conor - See more at: http://www.italymagazine.com/post/am-exploring-possibility#sthash.D3Dw5MLm.dpufConor,thanks for your input. As a California Real Estate Broker for close to 30 years, I was involved in many exchange transactions, some very complicated, however none involving international properties, hence my query to the forum. I do not want to get too deeply into the weeds, however yes, ideally one sells an investment property, sometimes to a third party and uses the proceeds to purchase another “like kind” investment property in order to take advantage of the “1031 Tax Deferred Exchange” provisions of the US Tax Code. In some markets, where real estate sales are slow, some sellers are more open to exchange possibilities to be able to get their property sold.Sometimes the property exchanged for is in a more active real estate market and can be sold more easily. In most cases, as we are dealing with investment properties, the property exchanged for is an income producer so there a positive economic result until such time as the property can be sold. Also, in the case of direct exchanges sans agents, the commission costs are substantially reduced or in many instances, eliminated. There are also savings regarding money exchange fees, escrow fees and other costs.So, all in all, both parties can benefit from direct exchanges involving investment properties, especially when one party really wants to divest and is in a slow market.Fred

But you are not taking into accou t �� law. Whar you want to do is called a 'permuta' in �� law. it is possible, but with a foreign property there will be all sorts of problems, mainly from the �� tax office who will want to know lots of stuff. When you buy in Italy you pay tax on the purchase, and this cannot be avoided when you permuta a property - it is never a straight swap. Everything will have to go through the Itlaian legal system and a notary otherwise it won't be legal. Given the translation costs for what will be a mountain of US paperwork, it really would be easier to sell and then buy.

Modicasa,Thank you for your obviously well informed input. The exercise is not necessarily focused on reducing costs of property acquisition, however there is considerable lessening of costs on the US side. As an example, a bank appraised property at $300,000.00 sold through the regular process would break down thusly: Sales commission $18,000.00, Transfer Tax $3,300. escrow fees $600.00 and Title Insurance $3,000.00, plus a few other minor expenses for a total of call it $25,000.00 which leaves $275,000.00 for purchase of another property. If the “target property” is situated in another country there also will be currency exchange fees.Contrast that with an exchange proposition wherein there is no sales agent involved on the US side. We have a bank appraised property at $300,000.00. We execute a notarized Grant Deed and present that to a Seller of an �� property as payment. Our US costs are $3,300.00 Transfer Tax, and $10.00 recording fee for the Grant Deed.Would the �� Notary fees be higher than a regular purchase process? Is the US Bank appraisal of value sufficient for the purposes of the Notary assessing his fees, etc? All that is necessary in the US is for us to record the Grant Deed in the county where the property is situated with the name of the new owner and voila’, the property has a new, legal, and recorded owner.Having been through a number foreign transactions (Austria, Germany, and Italy) over the past 40 years, I am well aware of the differences in processes and laws that exist between the US and other countries, however I should think that there would be number of UK folks who, for whatever reason, wish to sell their �� property and would be appreciative of an opportunity to exchange it for a US property that could be income producing and/or a good winter vacation place. Given the reciprocal 6 month length of stay agreement between the US and UK, it can be an advantageous situation.I think this is probably a little deeper into the weeds than originally intended, so thanks again for your input.Fred