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Ask Miranda: Capital Gains Rollover
Question: Is there a way to sell a second home property in France and “roll” the gain into another second home property without paying or paying a small capital gains tax?
Answer: You may be thinking of a 1031 exchange under US law. Nothing like that exists in France; but for US buyers, two properties both located outside the US are considered “like-kind” for purposes of the like-kind exchange rules under 1031. This would not avoid capital gains tax in France though, just with respect to your capital gains tax in the US, which will be less than the French capital gains for quite some time. Under the new rule, you’d hold for 18 years before you’d get under the 15% long-term capital gains rate in the US. See our blog post for more on capital gains tax issues in France.
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