Here is a list of the items that are probably OK to pay using 1031 exchange funds as long as they relate to the specific exchange transaction:
Broker Commissions
Finder and Referral Fees
Title Insurance Premiums (for owner’s title insurance specifically)
Closing Agent Fees
Tax Advisor and Financial Planner Fees
Recording and Filing Fees
State Deed Tax and Transfer Charges
Attorney Fees Related to the Specific 1031 Exchange Transaction
It’s important to remember that these expenses are only OK to pay using 1031 funds insofar as they are related to the 1031 exchange itself. For example, fees from your attorney for working specifically on the 1031 exchange would be appropriate, but any additional attorney fees (for estate planning, for example) would not be appropriate.
You can also choose to pay all of these transactional fees out of pocket and keep your 1031 exchange funds completely separate. That would be the safest, most conservative course of action.
Deferring Taxable Gain with a 1031 Exchange
Defer your taxable gain when you sell investment real estate by conducting a 1031 exchange! Interested in learning more about the 1031 exchange process and whether your property is a good fit? Contact the qualified intermediaries at CPEC1031, LLC today. We have been helping taxpayers with their 1031 exchanges of real estate for more than twenty years. Our experience in the 1031 exchange industry makes us well suited to assist you with your next real estate exchange. Reach out to us today to set up a time to chat about your exchange!
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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