Real estate glossary
1031 Exchange
The tax deferred sale and purchase of properties that
are like-kind for the benefit of deferred gain treatment.
Boot
Cash or mortgage relief received in an exchange, the
result of which is a taxable gain.
Closing
The transfer of title of real property in a real estate
transaction.
Constructive Receipt
The ability of the investor (exchangor) to exercise control
over the proceeds or exchange equity resulting
from the transfer of the relinquished property.
Exchange Equity
The cash and/or other property available at the time of
closing on the sale of the relinquished property.
Exchange Period
The 180 day period in which the exchangor must complete
their 1031 exchange by acquiring title to the
replacement property. The 180-day period begins on
the day title transfers on the relinquished property.
Exchangor
The taxpayer intending to defer the taxable gain on the
exchange of investment property.
Gain
The taxable portion of the sale price.
Identification Period
The 45-day period for identifying the replacement
property. The identification period starts on the day
title transfers on the relinquished property.
Like-Kind
The properties being exchanged must be of the same
asset class. Like kind is defined in the tax code as
meaning "similar in nature or character, notwithstanding
differences in quality or grade". All real property is
considered like kind and must be held for investment
or held for productive use in a trade or business.
Relinquished Property
Investment property sold as part of an exchange.
Replacement Property
Investment property acquired as part of an exchange.
"Starker Exchange"
A term used to describe delayed, non-simultaneous,
exchanges. Starker vs. United States (1979) established
the delayed exchange concept.