---
title: "What Does a 1031 Exchange Cost?"
description: "A standard forward 1031 exchange runs about $600 to $1,200 in qualified intermediary fees per property; reverse and construction exchanges cost $3,000 to $7,500 or more."
published: "2026-08-14"
canonical: "https://blog.saltharborrealestate.com/blog/1031-exchange-cost"
author: "Everitt Gill"
---

A standard forward 1031 exchange costs about $600 to $1,200 in qualified intermediary fees for a single property, plus roughly $300 to $450 for each additional property in the same exchange. That intermediary fee is the only cost unique to a 1031. Everything else (title, escrow, recording, commissions) you would pay on any sale, with or without the exchange. Reverse and construction exchanges cost more, often $3,000 to $7,500 or higher.

So the line item people brace for is usually a four-figure fee sitting next to a five- or six-figure tax bill. Sell a weekly-rental condo on the south end of the island that has tripled since you bought it, and the math is not close.

A quick word on what we are actually counting. The cost of a 1031 splits into two piles: the fee for the exchange itself, and the ordinary closing costs of selling one property and buying another. The first is small and predictable. The second you would owe regardless. Mixing the two is how people talk themselves out of a deferral worth more than a year of rent.

## How much is the qualified intermediary fee?

The qualified intermediary fee runs $600 to $1,200 for a standard forward exchange of one property, with another $300 to $450 added for each extra property in the same exchange. You pay it at the closing of your sale. It covers holding your proceeds in a separate account, drafting the exchange agreement, and keeping the money out of your hands (the moment it lands there, the exchange is dead and the tax comes due).

A 1031 legally requires this third party, and you cannot run one yourself. Who can and cannot serve as your intermediary (your own agent, attorney, and CPA are all disqualified) and how to vet one are covered on our [qualified intermediary page](https://blog.saltharborrealestate.com/blog/1031-exchange-qualified-intermediary). On cost, the one thing to know is that the cheapest quote is not the one to chase. This company holds your entire sale proceeds for up to 180 days. Some intermediaries also keep the interest earned on those funds while they sit, so on a large balance held for months, that interest is part of what you are really paying. A bonded, well-insured firm charging a few hundred more is the better deal.

## What other closing costs can the exchange pay for?

Most normal selling costs can come straight out of your exchange funds without creating a tax problem. The IRS treats broker commissions, title insurance, escrow and closing fees, recording fees, transfer taxes, and the intermediary fee as exchange expenses. Paying them from proceeds does not count as pulling cash out. Other costs get no such treatment, and paying them from exchange funds creates taxable "boot."

The split matters because boot is taxed even inside a 1031. Here is the rough divide:

| Paid from exchange funds, no tax | Creates taxable boot |
|---|---|
| Broker commissions | Loan origination and lender fees |
| Title insurance, escrow, closing fees | Property tax and insurance prorations |
| Recording fees, transfer taxes | Repairs and utility credits |
| Qualified intermediary fee | Security deposits transferred |

If you are buying the replacement with a new mortgage, ask your closer to handle the loan costs outside the exchange account. It is a small piece of paperwork that keeps a few hundred dollars from quietly turning into a taxable event.

## Why do reverse and construction exchanges cost more?

A reverse exchange (buying the replacement before you sell the old property) and a construction or improvement exchange both cost far more than a standard forward swap, commonly $3,000 to $7,500 and up. The jump comes from the parking arrangement: a separate entity has to take title to one property and hold it while the clock runs, which means an LLC, extra documents, and sometimes holding costs. When a reverse is worth that premium is covered on our [reverse exchange page](https://blog.saltharborrealestate.com/blog/reverse-1031-exchange). For most sellers here, the plain forward exchange is the one they will use.

## Is a 1031 exchange worth the cost?

For most investment-property owners with real appreciation, yes, because the fee is tiny next to the tax it defers. Sell an appreciated rental outright and you can face [federal long-term capital gains](https://blog.saltharborrealestate.com/blog/federal-capital-gains-tax-florida) of 15% or 20%, depreciation recapture taxed up to 25%, and the 3.8% net investment income tax on top. On a property that has gained $200,000, that stack can run well past $40,000. A $900 intermediary fee against that is an easy call.

Florida adds nothing to the federal bill, since there is no state income tax to defer (our [rules page](https://blog.saltharborrealestate.com/blog/1031-exchange-rules) walks through what that means for your numbers). The savings are purely federal, and they are still the whole reason to bother.

The cost only stops making sense in a handful of situations: a property with little gain, a sale where you actually want the cash and will pay the tax anyway, or a timeline you cannot meet. The deadlines are unforgiving and run on calendar days, and our [timeline page](https://blog.saltharborrealestate.com/blog/1031-exchange-timeline) lays them out.

When we list an investor's duplex in Yulee or a long-held cottage in the historic district, the first call after we agree on price is to line up the intermediary before closing, not after. Once the proceeds hit your own account, no fee can buy the deferral back. Doing it right costs a few hundred to a few thousand dollars. Doing it a day too late costs the entire tax bill.