In the scenario you outlined, there are only 2 ways that I can think of right now that they would find out about your misreporting outside of an audit - if this was a commercial client that files 1099s, or if you file a partnership or scorp return and present a balance sheet that includes prepaid rent and is a cash basis return.Cash income is recognized if you have constructive receipt as of the last day of the tax year.

@Kareem Aaron not from your area, but all of the research that I completed reveals there is no statute on prepaid rent.

The max 6% credit cannot exceed the ACTUAL amount of the closing costs and prepaids (prepaids are the initial escrows, 1st year homeowners insurance premium, property tax due if any, and interest until the end of the month).2.

Even deposits and prepaid rent puts you at risk if it's on the settlement statement.The answer is to finish the 1031 with the purchase using all of your 1031 proceeds. 

Dont forget financing costs, closing costs, prepaids, etc etcRoofing costs are VERY high right now. 

If you wish to get a first assessment consider joining a pre-paid legal plan.

If there are any delays in completion ofthe project, Borrower shall notify the Lender in writing via email.This note may be prepaid by the Borrower at any time in whole or in part without premium orpenalty.

You will learn quite a bit, things like setting up a second line, setting up a mailbox, drafting late rent notices, having prepaid mail etc. 

HI Chad,Some banks like the one I work at offer a product that is tailored to your needs, such as 23 year fixed mortgage product instead of restarting your 30 year time clock on your current 23 year remaining note.When you ask the question of whether its worth it to refinance with a 1% rate reduction, it depends on how much costs your paying to close as you may want to consider your bigger picture perspective or have someone who is going to have the knowledge and patience to explain those options to you.I've had some clients who refinance with as low as .125 to .25% rate reduction but in those instances I provided them a lender credit so large they in essence had no out of pocket at all and in some cases were able to skip a month or two in payments (lender credit issued covered all closing, impounds, prepaids, etc).so 1% savings is awesome but if it costs 10k it may not be worth it if you're going to be out of the home in 1-2 years, however if you were in the home for 30 years you'd have time to recoop your savings slowly over an extended period of time and possibly make back all your money you spent upfront. so like all answers in life, it depends.

Maybe even use PrePaid Legal?