Exchange Definitions
Here are some helpful definitions to make sure you know what to expect during our consultations.
Boot
The fair market value of any non-qualified property received in an exchange. Some common examples of boot are: cash, debt relief that is not offset with new debt, property intended for personal use, and property which is neither like-kind nor like-class to the relinquished property.
Constructive Receipt
This is a term referring to the control or ability to receive proceeds by an Exchanger even though funds may not be directly in the Exchanger's possession.
Exchange Accommodation Titleholder (EAT)
The person or entity used to facilitate a "reverse" or "improvement" exchange. The EAT will hold (park) title to either the relinquished or the replacement property during the exchange.
Exchange period
The period during which the Exchanger must acquire replacement property in the exchange. The exchange period starts on the date the Exchanger transfers the first relinquished property and ends on the earlier of the 180th day thereafter or the due date (including extensions) for filing the Exchanger's tax return for the year of the relinquished property.
Exchanger or taxpayer
The property owner seeking to defer capital gain, recapture or other income tax by by utilizing a IRC 1031 exchange.
Forward exchange
The most common form of exchange transaction in which the exchange begins with the sale of the relinquished property to a buyer and concludes with purchase of replacement property from a seller. Usually a third party.
identification period
The period during which the Exchanger must identify replacement property in the exchange. This period starts on the day the Exchanger transfers the first relinquished property and ends at midnight on the 45th day thereafter.
improvement exchange
An exchange in which improvements are made to the replacement property prior to acquisition by the Exchanger, either using exchange funds or funds lent by the Exchanger to the Exchange Accommodation Titleholder.
like-kind property
Properties having the same or similar nature or character, regardless of differences in grade or quality. Generally, all real property located within the United States is considered to be "like-kind" to all other U.S.A. real property as long as the Exchanger's intent is to hold the properties as an investment or for productive use in a trade or business. The definition for personal property of "like-kind" is more restrictive.
Qualified intermediary
The person or entity that facilitates the exchange for the Exchanger. Other common term are "exchange facilitator" or "exchange accommodator".
relinquished property
The "old" property divested (sold) by the Exchanger.
replacement property
The "new" property acquired (purchased) by the Exchanger.
Reverse exchange
An exchange involving an Exchange Accommodation Titleholder when it is necessary for the replacement property to be acquired before the relinquished property can be sold to a buyer, or when improvements need to be made to the replacement property before it can be acquired by the Exchanger.