The short answer
A QI year-end statement is the accounting a qualified intermediary gives you after the exchange or at year end, showing exchange funds received and disbursed, fees and other closing costs paid from the account, interest earned, and the transfer, identification and receipt dates. No regulation prescribes the document by name; it is how the intermediary hands your preparer the facts needed for Form 8824 and for your interest income. Who pays tax on the interest depends on the exchange agreement under Reg. section 1.468B-6.
At a glance
| What it shows | Funds in, funds out, fees and costs paid, interest earned, and the exchange dates |
|---|---|
| Form 8824 dates | Date transferred, date identified and date received come from it |
| Interest | Taxed to you if the agreement pays you all earnings; otherwise the funds are treated as a loan to the intermediary |
| Small-loan exemption | No imputed interest on an exchange facilitator loan of $2,000,000 or less lasting 6 months or less |
Each line on the statement answers a question on your return.
The statement is a business record, not a prescribed form, so layouts differ. Ask for one that covers the whole exchange, not just the calendar year. What a preparer looks for maps onto Form 8824 and the interest rules:
- Dates: line 4 asks when you transferred your property, line 5 when replacement property was identified in writing, and line 6 when you received it.
- Costs: exchange expenses paid from the account reduce cash received on line 15 or are added on line 18, per the Form 8824 instructions.
- Interest: under Reg. section 1.468B-6(c), if the agreement pays all earnings to you, you take them into income; if not, the funds are treated as a loan to the intermediary, which must take the earnings into its own income.
- Cash returned to you: money paid out to you is cash received, which line 15 counts toward recognized gain.
A worked example shows a statement that spans two tax years.
Hypothetical: you sell a rental on November 1, 2025, and $500,000 of net proceeds goes to your intermediary. You identify a replacement on December 10 and close on it on February 20, 2026, with $497,000 paid out of the account. The statement shows $1,500 of intermediary fees and $1,500 of interest credited and paid to you.
Form 8824 is filed with your 2025 return, the year you transferred the property. Because the agreement paid you all earnings, you include the $1,500 of interest under your accounting method, as Reg. section 1.1031(k)-1(h)(2) requires. The fees are exchange expenses on Form 8824; see whether exchange fees are deductible or added to basis. The example is rounded for clarity, so confirm your own figures with your CPA.
It bites when the exchange straddles a year end or the funds sit in a commingled account.
The Form 8824 instructions for line 6 note that the replacement must arrive by the earlier of the 180th day or your return due date including extensions. A statement that arrives after you file does not help if you filed on time without extending; see keeping the full 180 days with a tax extension and the tax-year straddle guide.
If the intermediary pools your funds, all earnings count as paid to you only if your pro rata share, figured by a reasonable method, is paid or treated as paid to you. Otherwise the loan treatment applies, and Reg. section 1.7872-5(b)(16) exempts it from imputed interest only up to $2,000,000 for 6 months or less. More on the money itself is in interest on exchange funds.
Related questions
Who pays tax on interest earned on my exchange funds?
If the exchange agreement pays all the earnings to you, you do, and it is treated as interest income. If it does not, the funds are treated as loaned to the intermediary, which takes the earnings into its own income.
Are closing costs paid from the exchange account a problem?
Transactional items that appear on typical closing statements, such as commissions, prorated taxes, recording or transfer taxes and title fees, are disregarded under Reg. section 1.1031(k)-1(g)(7) when testing the safe harbor. They still show on the statement and are reported as exchange expenses.
When should I ask for the statement?
Ask when the replacement closes and again after year end, so your preparer has the final interest and fee figures before filing.
Sources
Checked against these publications on September 30, 2026. Rules and figures change; confirm the current version with your CPA or attorney before you act. This page is general information, not tax or legal advice.