1031 fees vs taking tax hit?

[Peter Brisette]

Paid $100,000 in 2012 for this rental to kids, they are moving. If we sell for about $200,000, we are in 15% bracket. Married $77000 income approx. What's better choice, pay the cap. Gain tax? And be done with it. Or, pay the fees to lawyers, real estate, intermediary ,etc,etc?? What would total amount of fees be doing 1031..or just pay tax. 

hope I got my point across.  Not in millions here. Lol.

[Dave Foster]

@Peter Brisette, You're accountant will have to give you an exact number but hand grenade math will have you with a capital gain of around $80K after selling costs which would be at 15% fed + whatever state rate for your locale - Ballpark $ 12K fed tax.

The hidden bugaboo is gonna be depreciation recapture which should be at 25% - ball park it at maybe another $7K of tax.  So a total federal tax bill of 19K plus state.  

Either way you'll be selling your property with all the usual professionals.  So the only added expense for the 1031 will be the required qualified intermediary.  $750 - $1000 is average.  Here's an article we wrote for BP on the typical cost of a 1031 - https://www.biggerpockets.com/blog/how-much-does-a-1031-exchange-cost.

No one ever went broke paying tax.  But the 1031 looks like it would save you around $18K immediately.  And the real power of the 1031 is your ability to use that $18K indefinitely to generate income to go into your pocket instead of the govt coffers.