1031 Exchange - Change QI

[Steven Candito]

I noticed on an older post that it is not easy to change QIs, but one commentor said it was possible.  I am looking to change QIs because my 1031 Exchange shifted from a tranditional one to an improvement exchange.  The current QI wants to raise their fee from $1,500 to $10,000.  In researching this issue, it looks like there are QIs that will facilitate this type of 1031 improvement exchange for a significantly lower fee.  Any advice?

[Dave Foster]

Thanks for that shout out @Ash Hegde.  @Steven Candito, in an improvement exchange it could be possible to use a different QI for the improvement exchange part of the process.  But I doubt if there would be much savings for you honestly.  I know there are some QIs out there who put the least effort into reverse type exchanges.  The price becomes very cheap (relatively).  But the risk of the documentation standing up to Rev Proc 2000-37 is pretty high.  And then any good qi firm is going to have to charge for the hassle of having to work with another QI firm to get the proceeds to put into the improvement exchange.

For instance, our regular fees would save you a couple of thousand $ but by the time we have to factor in the extra work to insert into the exchange I doubt if there would be much savings.

Those fees are a little high but not out of reason.  Maybe dancing with who brung you is the best course here - especially, remember that as long as the QI owns the property you are making the income from it.  So during the course of your improvement exchange you may make enough net income (if part of it is rented) to pay for the extra fee.