Bank Statement for a 1031 Exchange
A 1031 exchange lets real estate investors defer capital gains tax by rolling sale proceeds into a replacement property through a qualified intermediary (QI). Bank statements are the paper trail proving your sale proceeds moved to the QI's escrow account and back out to the new purchase, exactly as the IRS timeline requires. Here is how to document it.
Key Benefits
- Traces sale proceeds from closing into the qualified intermediary's account
- Documents the 45-day identification and 180-day exchange deadlines
- Supports your CPA's Form 8824 filing with a clear funds trail
- Provides proof the investor never took constructive receipt of funds
How It Works
- Step 1: Request statements from your QI showing receipt and disbursement of your exchange funds
- Step 2: Download your own bank statements from before and after the exchange as PDFs
- Step 3: Convert them to Excel with Bank Statement Converter to build a clean transfer timeline
- Step 4: Provide the full timeline to your CPA for Form 8824 and to your title company
Frequently Asked Questions
- Why do I need bank statements for a 1031 exchange?
- The IRS requires that you never take possession of the sale proceeds — they must go directly to a qualified intermediary. Bank statements are the evidence that the funds moved correctly and on time.
- What happens if I miss the 180-day deadline?
- The exchange fails and the transaction becomes a fully taxable sale. Bank statements showing the exact dates of fund movement are critical if the IRS ever questions your timeline.
- Can I use my own bank account as the intermediary?
- No. The IRS requires an independent qualified intermediary — using your own account (actual or constructive receipt) disqualifies the exchange entirely.
- Do I need statements from the QI, not just my own bank?
- Yes. Most QIs provide a full accounting statement of funds held and disbursed, which should be kept alongside your personal bank statements for tax records.
Convert Your 1031 Exchange Statements