How Much do you Charge for a Simple Like Kind Exchange

I charge $200 for an 8824 with a simple, middle class-type client, rental condo LKE.

I think I saw the average price in a survey somewhere and went just below it.

Is this too much?

Are you efficient at doing them? What hourly rate do you seek in general? How does that tie in with valued-added services you offer?

I wouldn't charge less than $200...

Think about the value you're providing to the client. You're (hopefully) saving them tens of thousands of dollars or more in current year tax liability by deferring gain to future tax years. Hopefully you were the one that brought this strategy to their attention and referred them to a qualified intermediary. With your help, they could keep 1031ing up and eventually pass down to their heirs at a stepped-up basis and avoid income tax on the gain altogether.

In that situation...and this may be a little entitled of me...but I think you deserve more than $200... That seems like seasonal strip-mall joint prices where they crank out 1040s and have per form pricing.

Again, internalize the value you're pricing in the fee. Let the client know, yes, the fee is high, but this is how much tax we're saving/deferred by implementing the strategy we've discussed.

How many of these are you doing each year? I do not see the average joe landlord utilizing the 1031 all that much so never really though that there are folks out there soliciting 8824 business. I know the Qualified Intermediaries are charging a much higher fee but are people even shopping price for an 8824.

Best billing strategy, charge as much as you can. I am sure there are people out there tacking on $900 for an 8824 and not thinking twice about it.

Wow $900?

I didn't bring up the idea. It's a long time client but he dropped off his docs and this is the first I've heard of it. Though I have given him extensive consultation on how depreciation works on a sale in the past.

Time to complete this form? 10 minutes? It's as simple as it gets. Which is why I question the price.

But yes, have spent a reasonable amount of time with him over the years.

He's a teacher and a $700 tax return fee is tough on him.

On the other hand he pays the realtor, title, and property management fees for his investments.

See how I'm mixed about this one?

Ok, it sounded like you were in the business of preparing tax returns for those utilizing 1031 exchanges.

Normally, I would have thought a client would go to their CPA/taxpreparer to see what the tax consequences would be from a sale and then decided if a 1031 is worthwhile. You do not really see people opting for a 1031 unless we are talking big bucks. If a client has a $50k gain or even a $100k gain, I would not be thinking 1031 unless the person was in the business of buying and selling investment property.

So without the time spent running the numbers before the sale took place, maybe you can only get a few hundred bucks for doing the 8824.

I would not be thinking 1031 unless the person was in the business of buying and selling investment property.

At that point I would think you have dealer status, and 1031 can't be used on property held for sale.

I wonder if my original post was clear that I'm charging him an ADDITIONAL $200 for the LKE (on top of $450 or so for a tax return with a rental and a sale of a rental).

Only you know if you are fairly compensated based on your time and value proposition.

Value, yes.

Not everyone with a PTIN and a laptop knows how to do these.

They are risky - if the deal is screwed up and gain is realized - you get sued directly or named as a party.
2k or more.

I had nothing to do with the deal. This is the first I have heard about it. My role will be to put a few numbers on his tax return. I'm not sure that I'm facing the liability you describe.

Maybe my post title should be, "how much do you charge for form 8824"

Berkshire CPA is correct. Most clients who think about 1031 exchange are owners of large real estate holdings. A min $500 charge is reasonable.

So you are saying charge this guy, a teacher with one simple rental property exchange, $900 ($400 for the tax return and $500 to include form 8824) for a tax return that takes me 20 minutes to prepare and 30 minutes to present?

I understand that I get paid for what I know, not just what I do, but it seems like a lot.