In a 1031 exchange, when you look at a HUD closing statement there a lot of confusing facts, figures, prorations, debits and credits, etc. These items can seem foreign and unfamiliar to many taxpayers. One of the concerns that many people have is “what if there are expenses on this closing statement that I'm not allowed to pay for with my exchange funds?”
Specifically, what about the following items:
tax prorations
security deposits
rent prorations
other lender related transaction expenses
The best course of action to take is to bring in your circle of advisers before you sign the closing statement. The way you can do that is to ask the title company to provide a preliminary closing statement and circulate it to your CPA or accountant for their review and comment. If you share the closing statement with them before closing you can adapt it and make some changes. But if you wait until April 15th of the next year to give them the completed signed closing statement there's nothing anyone can do after the transaction is closed.
Start Your 1031 Exchange: If you have questions about involving your CPA in your 1031 exchange, feel free to call me at 612-643-1031.
Defer the tax. Maximize your gain.
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