Qualified intermediary fee
The largest incremental cost is the QI fee. A standard forward exchange commonly runs $750–$1,500 in QI fees, though complex or reverse exchanges cost more. Some QIs also charge for additional properties in the exchange.
Additional transaction costs
The exchange structure adds complexity to both closings. Expect additional attorney review, title coordination, and closing preparation — typically an extra $500–$2,000 above normal transaction costs for each side of the exchange.
Costs versus tax deferred
For any significant gain, total exchange costs of $1,500–$3,500 are trivial versus the tax deferred. On a $200,000 deferred gain at a combined rate of 30%, you defer $60,000 — the QI fee is roughly 2% of that. For very small gains, run the 1031 calculator: if the tax deferred barely exceeds the costs and the hassle, paying tax and reinvesting freely may be simpler.
Frequently asked questions
How much does a 1031 exchange cost?
Typically $750–$1,500 for the QI fee, plus $500–$2,000 in additional closing and coordination costs for a standard exchange.
Are 1031 exchange fees tax-deductible?
QI and exchange fees are generally treated as selling costs that reduce the amount realized — they reduce the gain rather than being separately deductible.
Sources
Educational information and estimates only. Not tax advice. Tax rules change and vary by situation; consult a qualified tax professional before acting.