No, those expenses are not considered exchange expenses but they are deductible expenses for the replacement property if paid for out of pocket. If you use exchange funds for those expenses, they become taxable events.
For the most part, the following kinds of expenses are considered exchange expenses and do not create a taxable event:
- Broker’s commissions
- Exchange fees
- Title insurance fees for the owner’s policy of title insurance
- Escrow fees
- Appraisal fees required by the purchase contract
- Transfer taxes
- Recording fees
- Attorney’s fees incurred in connection with the sale or purchase of the property