Glossary

Glossary of terms for Unlimited Exchange.

a
Acquisition Propertysearch for term

See Replacement Property.

b
Bootsearch for term

Fair Market Value of non-qualified (not like-kind) property received in an exchange. (Examples: cash, notes, seller financing, furniture, supplies, reduction in debt obligations.)

Build-to-Suitsearch for term

The build-to-suit exchange is a tax-deferred exchange in which improvements are made to the replacement property. Once the necessary improvements are completed (within the 180-day exchange time period), ownership is transferred to the Exchanger and the exchange transaction is completed. This exchange variation gives investors more flexibility, providing the opportunity to either improve an existing property or construct a new replacement property. Also known as a construction exchange or improvement exchange.

c
Construction Exchangesearch for term

See Build-to-Suit.

Constructive Receiptsearch for term

Control of proceeds by an Exchanger even though funds may not be directly in his possession.

d
Deferred Exchangesearch for term

The deferred exchange is the typical 1031 exchange that most think about when discussing exchanges of real property. The tax-deferred exchange, as defined in Section 1031 of the Internal Revenue Code of 1986, as amended, offers real estate investors the opportunity to build wealth and save taxes. By completing an exchange, the investor (Exchanger) can dispose of his investment property, use all of the equity to acquire replacement investment property, defer the capital gain tax that would ordinarily be paid, and leverage all of the equity into the replacement property. Two requirements must be met to defer the capital gain tax: (a) the Exchanger must acquire like-kind replacement property, and (b) the Exchanger cannot receive cash or other benefits (unless the Exchanger pays capital gain taxes on this money). Also known as a delayed exchange or a Starker exchange.

Delayed Exchangesearch for term

See Deferred Exchange.

Downleg Propertysearch for term

See Relinquished Property.

e
EATH (Exchange Accommodation Title Holder)search for term

In a reverse exchange, the EATH takes and holds title to replacement property before the Exchanger finds a buyer for the relinquished property.

Exchange Partysearch for term

The property owner(s) seeking to defer capital gain tax by utilizing a Section 1031 exchange. (The Internal Revenue Code uses the term Taxpayer.) Also known as the exchange party.

Synonyms: Exchanger
Exchange Propertysearch for term

See Relinquished Property.

Exchangersearch for term

See Exchange Party.

f
Forward Delayed Exchangesearch for term

A type of exchange that occurs when a property is sold (relinquished property) and another property is purchased (replacement property) within 180 days following the sale of the relinquished property.

i
Identification Periodsearch for term

The first 45 days of the exchange period.

Improvement Exchangesearch for term

See Build-to-Suit.

l
Like-kind Propertysearch for term

The nature or character of property (not its grade or quality). Generally, real property is like-kind as to all other real property as long as the Exchanger's intent is to hold the property as an investment or for productive use in a trade of business. With regard to personal property, the definition of like-kind is much more restrictive.

p
Personal Property Exchangesearch for term
q
Qualified Intermediarysearch for term

The entity that facilitates the exchange for the Exchanger. Treasury Regulations use the term Qualified Intermediary; some companies use facilitator or accommodator.

r
Relinquished Propertysearch for term

The property 'sold' by the Exchanger. Also known as the exchange property or the downleg property.

Replacement Propertysearch for term

A term used to describe the property acquired by the Exchanger. Also known as the acquisition property or the upleg property.

Reverse Exchangesearch for term

Type of exchange in which the replacement property is purchased before the sale of the relinquished property.

s
Simultaneous Exchangesearch for term

Type of exchange in which the closing of the relinquished property and the replacement property occur on the same day, usually back-to-back. There is no time interval between the two closings.

Starker Exchangesearch for term

See Deferred Exchange.

u
Upleg Propertysearch for term

See Replacement Property.