Glossary

Like Kind Property
“Property held for productive use in a trade or business for investment” IRC 1031

Qualified Intermediary a.k.a Accommodator, (“QI”)
A third party who facilitates the exchange, this person must not be an agent of the taxpayer at the time of the transaction. For this purpose, a person who has acted as the taxpayer’s employee, attorney, accountant, investment banker or broker, or real estate agent or broker within the 2-year period ending on the date of the transfer of the first of the relinquished properties is treated as an agent of the taxpayer at the time of the transaction and thus is disqualified from being an intermediary.

Relinquished Property
Property you are disposing of.

Replacement Property
Property you are acquiring to complete your exchange

3 Property rule
Identify up to 3 properties without regard to value

200% Rule
Identify as many properties, but must be no more than 200% of fair market value of Relinquished Property

95% Rule
Identify as many properties, but must receive 95% aggregate fair market value of all identified Replacement Properties

45 Days
45 day period measured from the transfer of the Relinquished Property (typically the close of escrow) within which one must identify Replacement Properties

180 Day Exchange Period
180 days from the transfer of the Relinquished Property (typically the close of escrow); one must complete the exchange within the lesser of the 180 days or the due of income tax return for year of Relinquished Property disposition.

Cash Boot
Cash received in the exchange

Net Mortgage Relief
The excess of the amount of debt on the Relinquished Property above the amount of debt on the Replacement Property. In an exchange, this amount is usually taxable unless you contribute additional cash in the exchange to offset this amount.