Using a 1031 Exchange intermediary for small deals

[Andrey Y.]

I am wanting to sell a property in the coming months and since I did a recent cash out refinance, it will probably only have $50K in equity, that I want to reinvest into the next deal.

My question is, do I need to hire a 1031 exchange intermediary / representative if the transaction won't be a huge $$ amount? Appreciate any feedback you have on this, especially if you have done this sort of thing yourself.

[Dave Foster]

@Andrey Y., Beauty sleep didn't do anything for me :) . @Eric Mayer is absolutely right.  The cash that you have from the sale doesn't indicate at all the gain or the tax liability.  

You could sell a property with no equity because you've refinanced a number of times and yet own a big tax bill due to gain you took out in the refis and depreciation that needs to be recaptured.

Do you need an intermediary?  Only if you want to defer the tax.  How much is worth it?  An exchange will cost you $750 - $1000.  If your tax savings is greater than that the dollars are worth it.  Is the effort?  Up to you to say.

I did an exchange for a lady who saved $350 after paying the exchange and everything on a lot sale.   In her words "It's my money and it's worth it".  I also have clients who decide not to 1031 when the tax liability is hundreds of thousands.  

Your gain is the difference between the adjusted cost basis (purchase price-depreciation recap+capital improvements) and the net sales price.  That gain will be made up of depreciation recapture @25% and capital gain at 15% or 20% federal plus whatever HI wants.