Reverse 1031 Exchnage cost

[Payman A.]

Good day all. So I'm about to list a "break even" SFR for sale mainly to defer taxes since I've got my eye on an income producing 4plex but seller may not wait for forward exchange to take its course. Any ideas on the lowest fees I can expect to pay for a reverse and where? I've been getting quotes for $4K-6K vs. $1K for forward. Thanks, Payman

[Dave Foster]

@Payman A., Those are in the high ball park for a safe harbor reverse.  They're costly but there's  some other things to factor in such as the additional cost of financing which adds hidden costs to the reverse.  

On the flip side you'll want to figure that you are getting to double dip appreciation and income while the reverse is going on.  You're "buying" the new property and locking in it's basis so if market upticks 5% in a year you're getting the benefit of 2.5% appreciation over a 6 month reverse.  Same is true of the sale.  With a new 180 day window you can postpone the sale of the old property to get a little more appreciation or capture top dollar.  Of course the income from both is yours as long as you own both.  All of those factors can take a lot of the sting out of the reverse.