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"Can
I use exchange funds that are
being held by my intermediary
for items like earnest money and
appraisals prior to the closing
of my new property?”
Yes and no. The intermediary may
only advance funds from your exchange
account (the money being held
from your sale) for items that
are refunded if the closing never
occurred. Earnest money is the
most common example of this.
Although
items like survey fees and appraisals
are clearly associated with the
purchase of the new property,
they would not be refunded if
the deal fell through. Therefore,
exchange funds cannot be advanced
for these types of expenses. (However,
don’t be confused….
if these items are shown on the
settlement statement at the time
that the property is purchased,
exchange funds sent to the closing
can be used for these types of
costs.)
--The Experts
TEE-Shots
are Tips
from the Exchange
Experts
that are designed to make you think about, and ask questions about, the 1031 exchange process.
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