Is a 1031 exchange worth the cost?

Usually, if you have meaningful gain. A typical forward-exchange fee of roughly $1,000 is small next to the capital gains and depreciation-recapture tax you defer, which is often tens of thousands of dollars or more. The math is weaker if your gain is small.

Can I negotiate the QI fee?

Sometimes, especially on larger or multiple-property deals. But choose primarily on fund security, experience, and controls, not on price alone, since a failed QI can cost you far more than the fee.

Do I pay the fee up front?

The QI fee is generally paid out of the transaction, typically at the closing of your relinquished property. Confirm the exact structure with your intermediary.

Costs & fees

How much does a 1031 exchange cost?

For most investors, a 1031 exchange is inexpensive relative to the tax it defers. The main cost is the fee your Qualified Intermediary (QI) charges to hold your proceeds and process the exchange, and it is usually a few hundred to a few thousand dollars against a tax bill that can run into the tens or hundreds of thousands.

Here is what to budget for in 2026, and the one cost that is easy to miss.

The qualified intermediary fee

A standard forward (delayed) exchange, by far the most common type, typically runs about $750 to $1,500, with many straightforward deals landing around $800 to $1,000. That base fee covers the exchange agreement and assignment documents, the qualified escrow for your funds, and coordinating the closings.

Most QIs charge a small additional fee per extra property when you sell or buy more than one.

Reverse and improvement exchanges cost more

More complex structures cost more because they require an Exchange Accommodation Titleholder to hold (park) title and additional legal structuring:

Reverse exchange (buy before you sell): roughly $5,000 to $15,000 or more.
Improvement / construction exchange (use funds to build): roughly $7,500 to $15,000 or more.

The cost most people miss: interest on your funds

While your proceeds sit with the QI between closings, they earn interest, and industry analysis suggests the majority of a QI's revenue often comes from that float rather than the upfront fee. That is not necessarily bad, but it is worth asking two questions before you engage anyone: how are my funds held, and do I receive any of the interest?

A segregated, qualified escrow account in your own name is the gold standard for fund safety. Fund security matters more than saving a few hundred dollars on the fee.

Costs that are separate from the QI

Your normal transaction costs, such as title, escrow, recording, and real estate commissions, are separate and are paid at closing as usual. So are your own CPA or attorney fees if you use advisors, which is smart on a deadline-driven, high-stakes transaction.

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Frequently asked questions

Is a 1031 exchange worth the cost?: Usually, if you have meaningful gain. A typical forward-exchange fee of roughly $1,000 is small next to the capital gains and depreciation-recapture tax you defer, which is often tens of thousands of dollars or more. The math is weaker if your gain is small.
Can I negotiate the QI fee?: Sometimes, especially on larger or multiple-property deals. But choose primarily on fund security, experience, and controls, not on price alone, since a failed QI can cost you far more than the fee.
Do I pay the fee up front?: The QI fee is generally paid out of the transaction, typically at the closing of your relinquished property. Confirm the exact structure with your intermediary.

Keep reading

Educational information only, not tax, legal, or investment advice. 1031 rules and deadlines are strict and can change, so confirm with the IRS and your own CPA or attorney before acting. How we source content.