1031 exchange - Posted by techin
Posted by techin on September 07, 2005 at 18:08:16:
I am selling my rental house, and it is currently in escrew. I am going to do a 1031 exchange. I understand that I cannot take any money out of the escrew into my pocket.
There are expenses such as removing termite infestration that are required per contract agreement; there are also expeneses that are not in the contract such as installation of new carpet.
My question is: could these expenses be paid out of escrew to the corresponding repair companies without ruining the 1031 exchange?
I have asked the question to my exchange officer. She told me that it would not ruin the exchange, but I may have to pay tax at year end. But how would the IRS knows since I will not be issued an 1099?
Any help will be greatly appreciated.