The short answer
Not for genuine exchange expenses. When a buyer pays a cost you owe, that payment is part of what you received for the property, but commissions, attorney fees and similar selling costs are exchange expenses that the Form 8824 instructions subtract from boot, so the two cancel. The risk sits with everything else: if the buyer pays items that are not exchange expenses, such as your share of property taxes or a personal debt, the payment is consideration you received that nothing offsets unless the replacement side carries enough debt or added cash.
At a glance
| Amount realized | Includes amounts the buyer pays on your behalf |
|---|---|
| Exchange expenses | Commissions, attorney fees, deed preparation and similar selling costs |
| Netting | Exchange expenses reduce cash and other boot on Form 8824 line 15 |
| Your property taxes | If the buyer pays the seller's share, it is in your amount realized |
| Not exchange expenses | Property taxes, rent prorations, security deposits and repairs |
| Debt offset | Liabilities the buyer pays can be offset by debt or cash on the replacement |
A cost the buyer pays for you is part of your sale price
Publication 544 defines the amount realized as all the money you receive plus the fair market value of property received, and it 'also includes any of your liabilities that were assumed by the buyer and any liabilities to which the property you transferred is subject, such as real estate taxes or a mortgage.' A buyer paying your bill is paying you, just through a third party.
The buyer's side of the closing confirms it. Publication 551 adds to a buyer's basis 'any amounts the seller owes that you agree to pay, such as back taxes or interest, recording or mortgage fees, charges for improvements or repairs, and sales commissions.' What the buyer capitalizes, you realize.
For property taxes the rule is spelled out in Reg. Section 1.1001-1(b)(2): if the purchaser pays taxes treated as imposed on the seller, that amount is taken into account in the seller's amount realized, whatever the contract says about the price.
Exchange expenses net the payment back out of boot
Publication 544 describes exchange expenses as 'the closing costs you pay on the disposition of the property given up such as brokerage commissions, attorney fees, and deed preparation fees,' plus closing costs on the replacement. If you receive cash or unlike property, you 'subtract the expenses from the cash or FMV of the non-like-kind property.'
The Form 8824 instructions apply the same netting on line 15: add cash received, unlike property and net liabilities assumed by the other party, then reduce that sum, not below zero, by exchange expenses. A buyer covering your $40,000 commission puts $40,000 into the deal on one side and $40,000 of exchange expense on the other.
Which costs qualify is the subject of closing costs paid from exchange funds; the same list decides whether a buyer-paid item nets out.
The items that do not net: taxes, prorations, deposits and personal debts
Publication 544 is specific that 'property taxes, rent prorations, security deposits, and repairs' that show up on a closing statement are not exchange expenses. If the buyer picks up your share of the year's property tax, the amount is in your amount realized and has no exchange-expense offset.
It is treated like debt relief rather than cash, because the tax is a liability the buyer pays for you. Under Reg. Section 1.1031(b)-1(c), relief from liabilities is offset by liabilities you take on, so a replacement mortgage at least as large as your total relief covers it. A free-and-clear purchase leaves it exposed.
Rent and deposit handling has its own page, security deposits and rent prorations. A buyer paying off one of your unrelated debts at closing is consideration too, and the same exposure applies.
Worked example: $40,000 of commission and $6,000 of property tax
Hypothetical, round figures. You sell for $800,000 and the buyer also agrees to pay your $40,000 broker commission and your $6,000 share of property taxes. Your amount realized is $846,000.
The $40,000 commission is an exchange expense and nets to zero. The $6,000 of taxes is relief from a liability. Buy a replacement with any new mortgage of $6,000 or more, or add $6,000 of your own cash, and nothing is recognized; buy free and clear with only the exchange funds and $6,000 is boot, taxed up to your realized gain.
The simpler contract is often a higher price with you paying your own costs from the proceeds, so every dollar passes through the intermediary. Run your own numbers with your CPA.
Make the settlement statement tell the same story as the contract
Ask the escrow officer to show every buyer-paid seller cost as its own line, labelled with what it paid for. A lump 'buyer credit to seller' line invites the reading that you received cash.
Send the statement to your intermediary before closing so the exchange file matches it; the settlement statement page covers what to check. Seller credits running the other way, to the buyer, are a different question and do not belong on this page.
If your replacement will be free of debt, a share of a Delaware statutory trust's non-recourse mortgage can supply the small offset a liability like the tax proration needs.
Related questions
Is a buyer-paid commission income to me?
It is part of your amount realized, but it is also an exchange expense, so on Form 8824 it reduces boot by the same amount and usually nets to zero.
Is my share of property tax paid by the buyer an exchange expense?
No. Publication 544 lists property taxes among closing-statement items that are not exchange expenses; it is relief from a liability instead.
Can replacement debt offset buyer-paid property taxes?
Yes. Relief from liabilities is offset by liabilities you assume on the replacement under Reg. Section 1.1031(b)-1(c).
Does the buyer's payment change my gain?
It raises your amount realized, and the exchange expenses it covers raise the costs you subtract, so the realized gain changes only by the non-expense items.
Should the buyer pay my costs or should I raise the price?
Either can work. A higher price paid through the intermediary keeps the exchange file simpler, but the tax result is the same for true exchange expenses.
Sources
Checked against these publications on September 30, 2026. Rules and figures change; confirm the current version with your CPA or attorney before you act. This page is general information, not tax or legal advice.