1031 exchange

Forum|Forum|2 years ago
April 11, 2024
1 reply
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We are doing a 1031 exchange and will have a bit of profit left over. We are purchasing a new build and are considering a home inspection. Are the fees able to be paid out of the 1031 exchange funds that are from the sale of the other house? The other question is can hauling and landscape services also be paid out of those funds?

PaulaM

Employee

No, those expenses are not considered exchange expenses but they are deductible expenses for the replacement property if paid for out of pocket. If you use exchange funds for those expenses, they become taxable events.

For the most part, the following kinds of expenses are considered exchange expenses and do not create a taxable event:

Broker’s commissions
Exchange fees
Title insurance fees for the owner’s policy of title insurance
Escrow fees
Appraisal fees required by the purchase contract
Transfer taxes
Recording fees
Attorney’s fees incurred in connection with the sale or purchase of the property

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