What closing costs may be included in the exchange transaction?
Typical closing costs directly associated with the sale of the relinquished property or purchase of the replacement property may be debited from a taxpayer’s settlement statement without adversely affecting the exchange. Such typical costs include, but are not limited to, the following: title policy premium, title company fees, recording fees, commissions, intermediary fees and legal fees associated with the transaction. It also appears that certain due diligence fees, including surveys, appraisals, inspections and environmental studies may also appear on the taxpayer’s closing statement without harming the exchange, as long as such items appear as contingencies in the contract. There is little authority or guidance in the exchange regulations as to which closing costs may be paid as part of an exchange; however, the rule of thumb seems to be that those closing costs which typically appear on a settlement statement are usually allowed. Those items which do not typically appear on a set
