Strategic Exchange Advisors
Toll Free: +1.888.800.1031
Office: +1.678.805.4492
www.sea1031.com

The Pinnacle Building
3455 Peachtree Street, NE
Suite 500
Atlanta, GA 30326

Strategic 1031 Exchange Advisors, Atlanta, Georgia

1031 Terms/Glossary

Many clients are perplexed by the specific terminology and concepts used by Qualified Intermediaries. The following is a list of these items, and a brief explanation of their meaning.

Accommodating Titleholder (AT): » Also known as an Exchange Accommodation Titleholder (EAT), this is the entity or party that accommodates the taxpayer by holding the title of a Parked Property when executing a reverse, construction or leasehold exchange.
Adjusted Basis: » The adjusted basis of a property is calculated as follows: the original purchase price of the property, plus the cost of capital improvements, less depreciation or cost recovery deductions.
Boot: » Property which the taxpayer receives in an exchange which does not qualify as like-kind property, and is therefore subject to taxation. Cash proceeds are the most common form of boot.
Capital Gain: » Gain from the sale of real property is taxed as capital gain, which is calculated as follows: total sale price of the Relinquished Property, less exchange expenses, less the Relinquished Property’s adjusted basis.
Depreciation Recapture: » Investment property may be depreciated over time, pursuant to various provisions within the Internal Revenue Code, with such depreciation taken as a deduction against income tax. Upon the sale of the Relinquished Property, the depreciation that was previously deducted is recaptured and subsequently taxed.
Parked Property: » Property acquired by the AT as part of a reverse, construction, or leasehold exchange. The Parked Property will eventually become the Replacement Property in a successful exchange transaction.
Qualified Intermediary (QI): » The functionary that converts the sale and acquisition of like-kind property from a taxable event to a tax-deferred exchange by ensuring the transaction conforms to the IRS regulations. The QI may also be referred to as the intermediary, facilitator, accommodator, or qualified escrow holder.
Relinquished Property: » The property that is sold by the taxpayer as part of a 1031 exchange transaction.
Replacement Property: » The property that is acquired by the taxpayer as part of a 1031 exchange transaction.
Taxpayer: » The entity or party engaging in the exchange transaction. Also referred to as the client, exchanger or investor.