A 1031 exchange can save you six figures in capital gains taxes, but the qualified intermediary (QI) handling it will take a cut—and understanding those fees before you sign anything could save you thousands more. Most investors focus on the property swap itself and miss the hidden line items stacked into QI agreements. Here's what you actually pay for.
The Base Intermediary Fee
The most visible cost is the intermediary's administration fee, typically ranging from $600 to $2,500 depending on transaction complexity and the QI firm's size. A straightforward like-kind exchange (vehicle for vehicle, or small residential rental for another) lands on the lower end. A multi-property exchange or one involving partnerships or corporate entities can push toward $3,000 or higher.
Some QIs quote a flat fee upfront; others charge a percentage of the sale proceeds (usually 0.5% to 1%). Request a written quote before engagement. This isn't negotiable at every firm, but mid-market and smaller QIs often have flexibility if your exchange involves multiple properties or significant dollar amounts.
Hold and Custodial Account Fees
When you sell your property, the QI must hold your proceeds in a segregated trust account for up to 180 days until you identify and close on replacement property. That money sits dormant—but you still pay for it.
Account maintenance fees typically run $100–$300 per exchange, billed monthly or as a flat quarterly charge. Some firms bundle this into their base fee; others itemize it separately. If your exchange extends close to the 180-day deadline, you're paying for longer custodial oversight.
Wire transfer fees are another line item. The QI wires your sale proceeds to you, to your lender, or to the seller's attorney—each transfer might cost $25–$50. On a $500,000 exchange with multiple wire transactions, these add up to $150–$300.
Assignment and Reinstatement Fees
If you need to reassign your contract to a replacement property—common in exchanges where your initial target falls through—many QIs charge $200–$500 per assignment. This covers the legal paperwork and documentation required to swap the property you're buying into your exchange.
Reinstatement fees apply if you use DST (Delaware Statutory Trust) structures or want to modify your exchange terms mid-process. These run $150–$400 and are sometimes negotiable depending on the firm and your relationship with them.
Title Work and Documentation Costs
Your QI doesn't conduct the title search or prepare the closing documents—but they often coordinate with the title company and attorney. Some QIs pass through these costs directly:
- Title work: $300–$700 (handled by the title company, but your QI may charge a processing fee of $50–$150)
- Recording fees: $50–$200 depending on county and property count
- Legal review: $200–$600 if the QI's in-house counsel reviews exchange documents for compliance
Ask your QI whether they absorb these or pass them through. Transparent firms itemize every cost upfront; others bury small fees in a "miscellaneous" line.
IRS Reporting and Compliance Fees
The QI must file Form 8824 with the IRS and track your 45-day identification window and 180-day exchange period. Some firms charge a separate IRS compliance fee of $100–$250 to handle filing, deadline tracking, and amendment preparation if the exchange timeline shifts.
This isn't universal—many QIs include it in the base fee—but ask specifically. Missing IRS deadlines costs far more than this fee ever will, so paying for explicit compliance management is worth it.
What to Watch For
Check whether the QI charges early termination fees if you decide to abandon or restructure the exchange before closing. These can range from $300–$1,000 and often aren't disclosed unless you dig into the contract.
Also clarify the policy on failed exchanges. If your replacement property deal falls through and funds are returned to you (disqualifying the exchange), some QIs charge additional processing or wire fees on top of everything else.
Getting Transparent Pricing
Request a closing statement estimate in writing before you commit. Reputable QIs provide itemized quotes showing base fee, account maintenance, anticipated wire transfers, title charges, and compliance costs.
Mercoly helps you compare and find trusted 1031 exchange services providers side-by-side, so you can review fee structures from multiple firms before choosing one.
Start your 1031 exchange with a fee comparison—not a surprise bill at closing.