1031

The section of the Internal Revenue Code allowing tax-deferred exchanges of like-kind property.

Boot

Properties not qualifying under 1031 (e.g. receipt of cash, receipt of personal property in exchange for real property, a net decrease in mortgages without an offsetting investment). Boot is taxable, but if received appropriately, does not disqualify the entire transaction.

Constructive
Receipt

Having practical control over funds which are held by others.

Down-Leg

The sale or transfer of the old property by the client.

Up-Leg

The acquisition of the replacement property by the client.

Like-Kind

Property which qualifies for 1031 (presently, any investment real property qualifies even if of a different type [raw land is "like-kind" to an apartment building] but Congress could always change these rules).

Qualified Intermediary

The company holding the funds which were generated by the disposition of the investment property.

Target Property

The property being acquired as replacement property for the investor.

Delayed Exchange

A 1031 exchange where the sale of the original property occurs before the purchase of the replacement property.

Reverse Exchange

An exchange where the purchase of the replacement property occurs before the sale of the old property.

Starker

The name of the individual who won a major case validating the use of delayed exchanges. Delayed exchanges are sometimes called "Starker Exchanges."

45 Days & 180 Days

The requirements that the target property be identified within 45 days, and the replacement property acquired within 180 days of the closing of the sale of the original investment property.