text: 1231 like kind exchange...? hello and help,   i am a us citizen and live in new jersey. i have a rental condo in can-cun mexico.  i'm going to sell it.  can i do a 1231 like kind exchange for a similiar property (rental condo) at the new jersey shore?  i have to report my income/expenses from my property in mexico on us federal 1040.  if i can't do a 1231 exchange on us federal 1040 and i sell do i have to report a gain (or a loss) on the us federal 1040? you won't be able to exchange foreign property for us property.    you must report any gain/loss from the sale of the foreign condo.  foreign real property exchanges.   real property located in the united states and real property located outside the united states are not considered like-kind property under the like-kind exchange rules. if you exchange foreign real property for property located in the united states, your gain or loss on the exchange is recognized. foreign real property is real property not located in a state or the district of columbia.    this foreign real property exchange rule does not apply to the replacement of condemned real property. foreign and u.s. real property can still be considered like-kind property under the rules for replacing condemned property to postpone reporting gain on the condemnation. see postponement of gain under involuntary conversions, earlier.