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How are certain expenses incurred in the 1031 process, such as reliquished property real estate commission and closing costs as well as replacement property closing costs in the grand scheme of buying replacemnet property of equal or greater value to that of the relinquished property?

Does the law give the 1031 exchanger being any credit for those expenses (towards the qualification of same or more money spent for the purchase of the replacement property) or does the law look only at net amounts for both the relinquished and the replacement properties?

Sorry if this seems convolutes, perhaps an example would be selling property @ $50,000 and then acquiring property @ $40,000 (at face value the replacement property value is surely lower than the relinquished property, however, are the related real estate/closing expenses counted as a credit or not?).

Thanks in advance for your input!
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