When participating in a 1031 tax deferred exchange, it is wise to know what closing costs are tax deductible and which are not. Certainly it’s good business for one to consult with an accountant or a tax professional on this, but here is the quick and dirty overview.
Costs that can be deducted
- Real estate commissions
- Title insurance premiums
- Closing or escrow fees
- Legal fees
- Transfer taxes and Notary fees
- Recording fees
- Costs related to the 1031 exchange such as Qualified Intermediary Fees
Costs that cannot be deducted
- Mortgage points
- Assumption fees
- Credit Reports
- Lender’s title insurance
- Prorated mortgage insurance
- Loan fees such as application fees
- Property taxes
- Utility charges
- Association fees
- Hazard insurance
- Credits for lease deposits
- Prepaid rents and security deposits
Interested in finding out more about how a 1031 deferred exchange can help you make real estate investments while deferring your tax obligations, visit my website at www.JosephCapote.com.
Filed under: Buyer's Blog, Seller's Blog, 1031 tax deferred exchange
Joe Capote 