Qualified Intermediary Fees: What Does a 1031 Exchange QI Charge?

When planning a 1031 exchange, one of the first questions investors often ask is, “How much will this cost?” While the fees may seem like just another expense, they’re actually a small price to pay compared to the potential tax savings. Let’s break down what you can expect to pay in 1031 exchange fees. If you’re new to the topic, check out our 1031 exchange for dummies guide for a full walkthrough of how exchanges work.

Basic Fee Structure for 1031 Exchanges

Most Qualified Intermediaries (QIs) structure their fees in one of two ways: either as a flat fee or as a percentage of the transaction value. Some may use a combination of both, with a base fee plus additional charges for specific services. Curious how a qualified intermediary’s fee model works in general? See how a qualified intermediary gets paid.

What WealthBuilder 1031 Charges

WealthBuilder 1031 charges a flat $1,000 fee for standard delayed and simultaneous exchanges and a flat $6,500 fee for reverse and improvement exchanges. WealthBuilder does not add separate wire fees, administrative fees, or other surprise charges. Exchange funds held through WealthBuilder do not earn interest for the exchanger.

If you are exchanging into more than one replacement property, WealthBuilder 1031 adds a $250 charge for each additional property beyond the first. This fee is separate from the flat fee above and applies to standard, reverse, and improvement exchanges alike.

WealthBuilder 1031’s flat $6,500 fee for a reverse or improvement exchange includes all fees controlled by WealthBuilder, including the applicable state filing fee and the initial registered-agent fee, if any. WealthBuilder does not add separate wire, administrative, or surprise fees.

Independent third-party charges are not part of WealthBuilder’s fee because WealthBuilder does not control them. These may include title company, escrow, lender, recording, or other transaction-related charges. WealthBuilder does not perform or charge for outside legal work.

Percentage pricing can become expensive on larger transactions. Compare the total fee at your expected sale price, not merely the advertised rate. When comparing QIs, ask whether the quoted price includes wires, administrative work, additional properties, and other processing charges. WealthBuilder 1031 does not add separate wire, administrative, or surprise fees.

Where Your Exchange Funds Are Held (FDIC Insurance)

Not all Qualified Intermediaries structure their deposit accounts the same way. Many hold exchange funds in a single account at a single bank, which is generally insured only up to the standard FDIC limit of $250,000 per depositor — an amount that can be far less than the proceeds from a typical real estate sale. WealthBuilder 1031 holds exchange funds in accounts individually insured up to $240 million, giving investors significantly more protection than the standard FDIC limit provides.

What’s Typically Included (Other QIs)

Standard 1031 exchange fees usually cover:

• Document preparation and review
• Safe handling of exchange funds
• Coordination with title companies and other parties
• Basic consultation throughout the exchange process
• Required reporting documentation

Additional Costs to Consider (Other QIs)

Depending on your specific situation, you might encounter these additional fees:

• Wire transfer fees
• Multiple property charges (if exchanging into several properties)
• Rush fees for expedited services
• Complex transaction fees

Value vs. Cost

While focusing on fees is important, remember that a 1031 exchange can potentially save you thousands or even millions in capital gains taxes. When choosing a QI, consider:

• Their experience and expertise
• Security measures for handling funds
• Availability and responsiveness
• Track record of successful exchanges

Red Flags to Watch For

Be wary of QIs who:

• Won’t provide a clear fee structure upfront
• Charge significantly less than market rates
• Push unnecessary additional services
• Don’t maintain separate escrow accounts for exchange funds
• Aren’t bonded and insured
• Only offer standard FDIC insurance coverage (typically $250,000 per depositor) rather than enhanced, multi-bank protection for larger exchange balances
• Charge a large, percentage-based fee instead of a flat fee — percentage pricing can become very expensive on larger transactions

Not sure how to vet a QI beyond the fee sheet? Our guide on how to pick the best qualified intermediary near me covers the full checklist — credentials, fund security, and the right questions to ask.

Remember, the lowest fee isn’t always the best deal. Your QI plays a crucial role in ensuring your exchange complies with IRS regulations and completes successfully. The cost of a failed exchange far outweighs any savings on QI fees.

Frequently Asked Questions

How much does a 1031 exchange qualified intermediary charge?

It depends on the QI and the type of exchange. WealthBuilder 1031 charges a flat $1,000 fee for standard delayed and simultaneous exchanges and a flat $6,500 fee for reverse and improvement exchanges, with no separate wire, administrative, or surprise fees. Other QIs may charge a percentage of the transaction value instead, which can cost significantly more on larger sales.

Does WealthBuilder charge extra for exchanging into multiple properties?

Yes. If you’re exchanging into more than one replacement property, WealthBuilder 1031 adds a $250 charge for each additional property beyond the first, separate from the base flat fee.

Are there other costs beyond the QI fee?

Independent third-party charges — like title company, escrow, lender, or recording fees — are separate from any QI’s fee, since the QI doesn’t control them. WealthBuilder’s flat fee does include the costs WealthBuilder itself controls, such as the state filing fee and initial registered-agent fee on reverse and improvement exchanges.

What fee-related red flags should I watch for when choosing a QI?

Be cautious of QIs that won’t give a clear, upfront fee structure, that charge a large percentage-based fee instead of a flat rate, or that only carry standard FDIC coverage ($250,000 per depositor) rather than enhanced multi-bank protection for larger exchange balances.

Ready to learn more about 1031 exchange fees and how they apply to your specific situation? Contact WealthBuilder 1031 at 888-508-1901 for a transparent discussion of our fee structure and services. We believe in clear communication and no surprises when it comes to costs.

Related guides: Use of 1031 Exchange Funds, How a Qualified Intermediary Gets Paid, How to Pick the Best Qualified Intermediary Near Me

Chris Peterson — Texas Licensed Attorney & Founder, WealthBuilder 1031

Chris is the Owner and President of WealthBuilder 1031 and a licensed Texas attorney. He graduated from Wheaton College and the University of Texas School of Law and speaks regularly to realtors, accountants, and title companies about 1031 exchanges. Learn more →