The Short Answer
For a typical delayed 1031 exchange — sell first, buy within 180 days — expect total exchange-specific costs of roughly $1,000 to $2,500: a qualified intermediary (QI) fee of about $750–$1,500, plus modest title, escrow, and documentation charges beyond a normal sale. Against a tax bill that commonly reaches five or six figures on appreciated Texas investment property, the cost is usually a rounding error. Estimate what you’d actually defer with our 1031 exchange calculator.
The longer answer depends on the type of exchange, the number of properties, and what you let the exchange funds pay for. Here’s the full picture.
Qualified Intermediary Fees
Every delayed exchange requires a qualified intermediary — an independent party that holds your sale proceeds so you never touch them (which would disqualify the exchange). QI pricing is fairly standardized:
| Exchange Type | Typical QI Fee |
|---|---|
| Standard delayed exchange (one property each side) | $750 – $1,500 |
| Each additional relinquished or replacement property | $200 – $400 |
| Reverse exchange (buy before you sell) | $3,500 – $8,000+ |
| Improvement/construction exchange | $5,000 – $10,000+ |
Two things to know beyond the sticker price:
- Interest on your funds. Many QIs keep some or all of the interest earned on exchange proceeds while they hold them — often 30 to 180 days. On a large sale, that float can exceed the stated fee. Ask how interest is handled before you sign.
- Safety over price. Your QI holds your entire proceeds, and the industry is lightly regulated. Prefer QIs that use segregated, dual-signature accounts, carry fidelity bonding and E&O insurance, and have institutional backing. Saving $300 on a QI fee is a poor trade for custody risk on seven figures.
Which Costs Can Exchange Funds Pay?
This is where exchanges quietly go wrong. Certain costs can be paid from exchange proceeds without consequence; others create taxable boot if paid from exchange funds:
Generally safe (transactional expenses): broker commissions, QI fees, title insurance (owner’s policy), escrow and closing fees, transfer taxes, recording fees, attorney fees related to the sale or purchase.
Generally creates boot: lender fees and points, appraisal and inspection costs required by a lender, property tax and rent prorations, security deposits transferred, insurance premiums.
The fix is simple: bring personal funds to closing for the non-safe items, and have your CPA review the settlement statement before closing day. (More on the deadlines that govern all of this in our 1031 exchange timeline guide.)
Costs Nobody Puts on the Invoice
- Your time inside the 45-day window. Identifying solid replacement property in 45 days is the hardest part of most exchanges. Rushed acquisitions have a real cost that never shows up as a fee. This is a major reason some investors identify Delaware Statutory Trusts as a backup — DST inventory can typically be identified and closed quickly.
- DST and syndication fee loads. If you exchange into a DST, the sponsor’s offering costs and fees are embedded in the deal and disclosed in the private placement memorandum. They vary widely by sponsor — comparing that fee load is a core part of due diligence.
- CPA and legal review. Budget a few hundred to a couple thousand dollars for professional review, scaling with complexity. It’s the best money in the entire transaction.
The Math That Actually Matters
Compare the cost against the alternative. On the $900,000 Austin rental sale from our Texas capital gains guide — $550,000 total gain with $150,000 of depreciation — the federal tax bill without an exchange is roughly $138,000. Full exchange costs of ~$2,000 amount to about 1.4% of the tax deferred. Even the priciest reverse exchange stays in single-digit percentages.
The exception: modest gains. If you’d defer only a few thousand dollars, the fees, deadlines, and constraints may not be worth it — sometimes paying the tax and keeping full flexibility is the better decision. That’s a planning conversation, not a reflex.
Before You List the Property
Exchange economics are best evaluated before the sale contract is signed — the QI must be in place at closing, and identification pressure starts the day you close. If you’re weighing a sale, run the calculator to see the deferral at stake, then talk with us about whether an exchange — and which replacement path — fits your plan.
This article is educational only and is not tax, legal, or investment advice. Fee ranges reflect typical market pricing and vary by provider and transaction; confirm actual costs with your qualified intermediary and CPA.