1031 Exchanges the right thing to do?

[Paul Sweetman]

I was just notified by my CPA that a 1031 exchange might not be the  best way for me to take money from the sale of one property and buy another property. He said it could cost me more in leagal fees than it would save me in taxes. Does he know what he's talking about or should I find a new CPA?

[Rhonda Wilson]

We just completed our third 1031 exchange. In the latest exchange we paid $950 for the intermediary fee. There was no need for a special lawyer as the process is pretty standard. If your capital gains tax is going to be more than a few thousand dollars, I highly recommend a 1031 exchange. The biggest downside of a 1031 is the limited time that you have to identify a replacement property. That 45 days is very short and you may find that you have to buy something that might not have been your first choice.