Like most tax and legal transactions, the §1031 Exchange has its own unique language.
The following is a list of the terms to help understand the process.


  • 45-Day Deadline

    The deadline for identifying Like-Kind Replacement Properties to the Qualified Intermediary. In a standard Forward Exchange, this is the 45th calendar day following the sale of the Relinquished Property.

  • 180–Day Deadline

    The deadline for completing the §1031 Exchange, which is the 180th  calendar day following the sale of the Relinquished Property, at which time the Exchanger must acquire  title to the Like-Kind Replacement Property.


    The Accommodator, also known as the Qualified Intermediary, is an independent third-party that facilitates the §1031 Exchange by receiving and holding the proceeds throughout the exchange process and distributing them to complete the exchange.

  • Accelerated Depreciation

    Any method of depreciation used for accounting or income tax purposes which allows greater deductions in the earlier years of the life of an asset. 

  • Adjusted Basis

    The adjusted basis equals the purchase price of the Relinquished Property (including closing costs) plus capital improvements less depreciation. The calculation of the adjusted basis can be more complex for transactions that involve exchanges, gifts, and probates and property from a trust. Consult with a tax advisor for guidance.

  • Attorney Trust Account

    A separate account created to safeguard and protect client funds by segregating them from the attorney’s business funds.

  • Asset Class

    A group of securities that exhibit similar characteristics, behave similarly in the marketplace, and are subject to the same laws and regulations.


  • Beneficiary

    The person or entity who gains advantage or profits from the transaction.

  • Boot

    Cash or other non-qualifying property the Exchanger (person doing the §1031 Exchange) receives in exchange for his/her property. Boot is taxable.

  • Buyer

    The person or entity buying the Relinquished Property.


  • Constructive Receipt

    To have control over the cash proceeds with or without physical possession. If the Exchanger has constructive receipt of the proceeds from the sale of the Relinquished Property, the §1031 Exchange is not valid.

  • Capital Gains

    A type of tax levied on the profits that an investor realizes when he or she sells the capital asset for a price that is higher than the purchase price. 

  • Construction Exchange or Improvement or Build-to-Suit Exchange

    A §1031 Exchange in which funds from the sale of the Relinquished Property is used to make improvements to the Replacement Property.

  • Cooperation Clause (Relinquished and Replacement Property Addendums)

    A clause included in an addendum to the Purchase Agreement or Contract of Sale which contains cooperation language to prevent any dispute or misunderstanding regarding the form of the transaction.

  • Co-Mingled Funds

    A fund consisting of assets from several accounts that are blended together.



    A §1031 Exchange in which the Exchanger first sells the Relinquished Property through a Qualified Intermediary, and then obtains a Replacement Property through the Qualified Intermediary. This is also known as the Delayed Exchange, Starker Exchange or Forward Exchange.


    A type of §1031 Exchange in which the names on the property's title in a multi-member partnership or limited liability company change to reflect the individual names. A §1031 Exchange is then conducted, where one member may defer capital gains taxes while others cash out and pay taxes.


    Private governing agreements under which property is held, managed, administered, invested or operated.


    A bank account requiring 2 signatures in order to access funds.


    Transfer of title directly from the Exchanger to the buyer and from the seller to the Exchanger after all necessary exchange documents have been executed.


  • EAT - Exchange Accommodator Titleholder

    The entity that holds title to either the Relinquished Property or the Replacement Property in connection with a Reverse Exchange.

  • Escrow Agreement

    A legal document that outlines the terms and conditions between parties involved in an escrow.

  • Exchange Period

    The time period between the date of the transfer of Relinquished Property and 180 calendar days thereafter.

  • Exchanger

    The person or entity – the taxpayer -- doing the §1031 Exchange.

  • Express Trust Account

    A right in property created by a settler transferring property to a trustee for valid trust purposes.


  • Fidelity Bond

    A form of business insurance that offers an employer protection against losses - either monetary or physical - caused by its employees' fraudulent or dishonest actions.

  • FDIC Account

    An account that meets the requirements to be covered or insured by the Federal Deposit Insurance Corporation (FDIC).


  • Identification

    The designation of a property as a Replacement Property in a §1031 Exchange.

  • IRC §121

    A section of the Internal Revenue Code which provides taxpayers filing a federal tax return an exclusion on capital gains tax when selling their primary residence.

  • Irrevocable Trust

    A trust that cannot be modified or terminated without the permission of the beneficiary. The grantor, having transferred assets into the trust, effectively removes all of his or her rights of ownership to the assets and the trust.

  • Identification Period

    The time period in which a Replacement Property must be identified, which is 45 calendar days from the transfer of the Relinquished Property.

  • IRC

    The Internal Revenue Code, the domestic portion of federal statutory tax law in the U.S.


  • Like-Class

    Any two assets of depreciable personal property that fall within the same General Asset Class or Product Class.

  • Like-Kind

    Any two assets or properties that are considered to be the same type, making an §1031 Exchange between them tax free.


  • Personal Property Exchange

    The sale of personal property can be exchanged for the purchase of other personal property that falls within the same Product Class or General Asset Class.


  • Qualified Intermediary

    The Qualified Intermediary, also known as the Accommodator, is an independent third-party that facilitates a §1031 Exchange by receiving and holding the proceeds from the Relinquished Property throughout the exchange process and distributing those funds for the purchase of the Replacement Property in order to complete the §1031 Exchange.

  • Qualified Trust Account

    An account holding funds in trust for the benefit of the taxpayer. Any and all disbursements from the account occur only upon approval by the taxpayer in writing.


  • Recaptured Depreciation

    The gain received from the sale of depreciable capital property that must be reported as income.

  • Relinquished Property

    The property that the Exchanger owns at the outset of the §1031 Exchange transaction and then exchanges for a new property.

  • Replacement Property

    The new property that the Exchanger purchases during the §1031 Exchange process to complete the §1031 Exchange.

  • Reverse Exchange

    A property exchange in which the Replacement Property is acquired first, and then the Relinquished Property is sold.


  • Seller

    The person or entity who sells the Replacement Property to the Exchanger.

  • SPE – Special Purpose Entity

    A subsidiary company with an asset/liability structure and legal status that makes its obligations secure even if the parent company goes bankrupt. 


  • TIC – Tenant-In-Common

    The co-owners of an undivided interest in real property.