How Much Does a 1031 Exchange Cost? Full Breakdown of Fees

A 1031 exchange can defer a significant tax bill—but it is not free. The cost is usually modest compared to the taxes you may be deferring, yet small overlooked charges (wires, escrow fees, extra properties identified, reverse-exchange complexity) can add up or even create accidental boot if not planned.

This guide breaks down the real costs into a clear budget so you can estimate your total out-of-pocket and avoid surprises.

The Two Buckets of 1031 Exchange Costs

1) Exchange facilitation costs (intermediary + exchange administration)

These are paid to the intermediary/exchange company to structure, document, and administer the exchange and keep you from taking receipt of proceeds.

2) Transaction costs (closing costs on sale + purchase)

These are the normal real-estate costs: escrow, title, lender fees, recording, and sometimes transfer taxes.

Cost Item #1: Qualified Intermediary (QI) Fees

For a standard delayed exchange, QI fees are commonly in the hundreds to low-thousands depending on the provider and complexity.

Common pricing structures

Flat fee for a standard delayed exchange (one sale + one purchase)

Base fee + add-ons (additional properties, additional closings, extra wires)

Complex-exchange pricing (reverse/improvement/parking arrangements)

What may be included

Exchange agreement and assignment documents

Coordination with escrow/title

Holding proceeds under restricted access terms

Compliance workflow and timeline support

What may be extra

Wire fees (often per outgoing wire)

Overnight/document fees

Multiple replacement properties

Reverse/improvement exchange administration

Cost Item #2: Title, Escrow, Recording, and Transfer Fees

These vary by state and transaction size, but usually include:

Escrow/settlement fee

Title insurance (owner’s and lender’s if financed)

Recording fees

Transfer taxes (where applicable)

Cost Item #3: Legal and Tax Advisory Fees

Not always required, but often worth it if you have:

Multi-property exchanges

Partnership/entity restructuring issues

Reverse/improvement exchange planning

Significant depreciation schedules and basis complexity

This bucket can range widely depending on complexity.

Cost Item #4: Lender and Financing Costs (Replacement Purchase)

If you finance the replacement property, you may pay:

Loan origination

Appraisal

Credit/underwriting fees

Points or rate buydown

Lender title policy

These affect how much cash you need to close—and if you under-budget, you risk either failing to close in time or pulling cash out (boot).

Cost Item #5: Inspection and Due Diligence Costs

Typical items include inspections, survey, environmental review, and other deal-specific costs.

Cost Item #6: Reverse Exchange / Improvement Exchange Costs (If Applicable)

Reverse and improvement exchanges generally cost more because they require more structuring, documentation, and coordination, often involving a parking-style arrangement and additional closings.

Allowable vs Non-Allowable Expenses (Why It Matters)

Some expenses can be paid out of exchange proceeds without creating taxable boot, while others typically should be paid outside the exchange. This can be very fact-specific, so treat it as a professional-confirmation step: ask your exchange team and tax advisor which items should be paid from where.

Sample Budgets (Planning Ranges)

Scenario A: Standard delayed exchange (single replacement)

Intermediary fee: often hundreds to low-thousands

Wire/processing: varies, sometimes per wire

Escrow/title/recording: varies widely by state and deal

Legal/tax advisory: optional, varies widely
Planning idea: many basic exchanges land in the low-thousands total when you include all fees, but can be higher with complex financing, multiple closings, or advisory work.

Scenario B: Multiple replacement properties
 Add:

Additional intermediary processing/per-property charges (varies)

Additional escrow/title closings

Scenario C: Reverse exchange / improvement exchange
 Add:

Parking/accommodation administration costs

Additional documentation and closings
Plan for materially higher total cost than a simple delayed exchange.

7 Ways to Reduce Cost Without Increasing Risk

1. Decide exchange type early (avoid last-minute reverse complexity).
   
2. Limit unnecessary identifications and extra closings when possible.
   
3. Ask for a full fee schedule upfront (wires, extra properties, reverse/improvement, document fees).
   
4. Budget small charges to avoid accidental boot.
   
5. Use experienced escrow/title teams who have handled exchanges.
   
6. Keep your document and timeline workflow tight (less rework).
   
7. Do due diligence on your intermediary—fund handling practices matter.
   

FAQ — 1031 Exchange Costs

1. What’s the typical cost of a basic 1031 exchange?
   Many standard delayed exchanges involve an intermediary fee in the hundreds to low-thousands plus normal closing costs that vary by state and deal.
   
2. Why are reverse exchanges more expensive?
   They usually require additional structuring, documentation, and often more closings.
   
3. Can fees paid from exchange proceeds create boot?
   They can depending on the expense type. Confirm allowable vs non-allowable items with your professionals.
   
4. Is the cheapest intermediary always the best choice?
   Not necessarily. You should consider controls, process discipline, and security of funds, not only price.
   
5. What’s one cost people forget?
    Wires, processing add-ons for multiple properties, and “small” closing items that add up.