Accommodator/Facilitator
Called a qualified intermediary by regulation, the accommodator assists the taxpayer in 1031 exchange transactions by providing proper instruction, documentation and handling of funds. The qualified intermediary cannot be a family member or someone with whom the exchanger has a business relationship.
Basis
The value of the taxpayer's investment in the property to be sold.
Boot
Non "like-kind" property received in an exchange, such as cash, debt relief, notes, etc.
Capital Gain
The amount of a sale subject to capital gains tax calculated by subtracting adjusted basis from the sales price.
Constructive or Actual Receipt
Access to or control of any of the exchange proceeds.
EAT
The exchange accommodation titleholder which is the special purpose entity that may own investment property in a reverse or improvement exchange.
Exchange Agreement
An agreement between the Qualified Intermediary and the taxpayer as required by regulation prior to the closing of any of the property transactions.
Exchange Period
This is the period when the exchanger must acquire replacement property. The exchange period starts on the date the exchanger transfers the first relinquished property and ends on the earliest of the 180th day thereafter or the date (including extensions) of the exchanger's tax return for the year of the transfer of the relinquished property.
Exchanger
The property owner seeking to defer capital gains tax by utilizing a 1031 tax-deferred exchange referred to in regulation as the taxpayer.
Form 8824
The IRS form the taxpayer completes and is included with the tax filing for the year in which the sale of the relinquished property occurs.
Identification Period
The 45-day period when the exchanger must identify replacement property. The identification period starts on the day the exchanger transfers the first relinquished property and ends at midnight on the 45th day thereafter.
Like-Kind
Section 1031 requires the taxpayer exchange for like-kind property. Investment real estate is exchangeable for other investment real estate, whether improved or unimproved. Personal property is more exacting requiring meeting the asset classes/product codes.
Qualified Intermediary
A qualified intermediary is the accommodator who assists the taxpayer in 1031 exchange transactions by providing proper instruction, documentation and handling of funds.
Relinquished Property
The property being sold by the exchanger.
Replacement Property
The property being purchased by the exchanger.
Tenant In Common (TIC)
Property that is jointly owned by up to 35 co-owners managed by a sponsor. TIC's are popular investments for those investors who do not wish to be in direct property management.