Glossary
This glossary provides clear definitions for common terms related to 1031 exchanges, DSTs, TICs, and other real estate investment strategies. It is designed to help investors quickly understand the language used throughout the exchange process and when reviewing potential replacement property options.
If you are researching tax-deferral strategies or comparing passive investment solutions, the definitions below can serve as a useful reference. Our goal is to make industry terminology easier to understand so you can move forward with greater clarity and confidence.
1031 Terms
Relinquished Property
A Relinquished Property refers to the property that an investor is selling or transferring as part of the exchange process. The 1031 exchange, also known as a “like-kind exchange” or a “Starker exchange,” allows investors… Read More
Safe Harbor
Safe Harbor refers to certain provisions or guidelines laid out by the IRS that allow investors to comply with regulations and avoid potential penalties when engaging in tax-deferred exchanges under Section 1031 of the Internal… Read More
Same Taxpayer Rule
The Same Taxpayer Rule in the context of a 1031 exchange (also known as a like-kind exchange) in the United States refers to a requirement that the taxpayer who sells the relinquished property must be… Read More
Section 1031 Of The Internal Revenue Code
Section 1031 of the Internal Revenue Code (IRC) plays a crucial role in the real estate investment industry by providing investors with a tax-deferral strategy on capital gains. Often referred to as a “1031 exchange”… Read More
Seller Carry-Back Financing
Seller Carry-Back Financing, or seller financing, is when the seller of a property acts as the lender for the buyer’s mortgage. Instead of the buyer securing a mortgage from a traditional lender like a bank,… Read More
Simultaneous Exchange
Simultaneous Exchange refers to a type of transaction where the relinquished property and the replacement property are swapped simultaneously; that is, the transfer of ownership for both properties occurs at the exact same time. Section… Read More
Starker Exchange
A Starker Exchange, also known as a delayed exchange, is a part of the broader 1031 exchange industry, which deals with the tax-deferred exchange of investment and business properties. Section 1031 of the Internal Revenue… Read More
Step-Up Basis
A step-up in basis refers to the adjusted value of an inherited asset for tax purposes. Here’s a more detailed breakdown: Basis: In tax terms, “basis” typically refers to the original value of an asset… Read More
Straight-line Depreciation Method
Straight-line depreciation is a standard accounting practice used to allocate the cost of a tangible asset over its expected lifespan. In real estate investment, this approach allows investors to allocate the value of their properties,… Read More
Substantial Improvement
The concept of substantial improvement plays a crucial role in determining whether certain tax benefits are available to investors. While the term is more explicitly defined within the framework of QOFs, it can also be… Read More
Tangible Personal Property
A 1031 exchange, as defined under Section 1031 of the Internal Revenue Code, allows an investor to defer capital gains tax when selling an investment property and reinvesting the proceeds from the sale within certain… Read More
Tax Basis
Tax basis in the context of the 1031 exchange industry refers to the value assigned to a property for tax purposes that will be used to calculate capital gains tax when the property is sold… Read More