1031 Exchange Terms you
Need to Know

Exchange Tax Compliance

The necessity of complying with IRS regulations, including reporting the 1031 Exchange on tax returns, to maintain tax-deferred status.

Facilitator

A term sometimes used interchangeably with "Qualified Intermediary" to describe the entity that assists in the 1031 Exchange.

Facilitator's Fee

The fee charged by the qualified intermediary for their services in facilitating the 1031 Exchange.

Financial Advisor

A professional who provides advice on investment and financial planning, often involved in discussions about 1031 Exchanges.

Fixed or Relocatable Structures

Real property improvements that may or may not qualify as like-kind property, depending on their attachment to the land.

Fractional Ownership

Ownership of a property shared with other investors, typically organized through fractional ownership structures.

Full Trade

A situation where the value of the replacement property equals or exceeds the net sale price of the relinquished property, allowing for a fully tax-deferred exchange.

Good Faith Deposit

A deposit made by the exchanger during the identification period to secure the purchase of a replacement property.

Grantee

The party receiving property through a deed, often relevant when conveying replacement property in a 1031 Exchange.

Amendment Agreement

A legal document used to modify the terms of a 1031 Exchange, often used to make changes during the exchange process.

Holding Period

The duration a property is held before being sold, which impacts eligibility for a 1031 Exchange.

Identification Period

A 45-day period during which the exchanger must identify potential replacement properties in writing to the qualified intermediary which begins upon the closing of their relinquished property.