What Title Closers Should Know About Closing Costs & 1031 Exchanges

Many closers are put in an uncomfortable position because taxpayers have all kinds of credits and debits on their closing statements and the closer is asked if these expenses are permitted transactional expenses that may appear on a closing statement. The closer doesn’t have the tools to answer these questions.

Big Picture

Let’s talk really big picture. On the sale of the relinquished property the taxpayer wants to move all of their equity into their new replacement property. The taxpayer is allowed to pay out of the net proceeds certain transactional expenses like:

  • Realtor commissions

  • Attorney fees related to the exchange

  • Recording fees

  • State deed tax

But sometimes the taxpayer wants to put an oddball expense on the closing statement like a bill from home depot or other expenses unrelated to the transaction. Those oddball expenses that wouldn’t normally appear on a closing statement should ring an alarm bell.

The other expenses that might need to be addressed are debits for security deposits, rent proration, and property taxes.

  • Start Your 1031 Exchange: If you have questions about 1031 exchanges, feel free to call me at 612-643-1031.

Defer the tax. Maximize your gain.

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