What is the Terminology that I need to know?

Accommodator: Qualified intermediary.

Basis: Exchanger’s investment in property, for tax purposes.

Boot: Cash or other non-qualifying (not like-kind) property received in an exchange; boot is taxable.

Buyer: Person buying the relinquished property.

Client: Exchanger; the taxpayer; the investor.

Constructive Receipt: Control of the cash proceeds with or without actual physical possession. If the client is in “constructive receipt,” the transaction will not qualify.

Deferred Exchange: Same as a 1031 exchange; reciprocal transfer of relinquished property for replacement property.

Direct Deeding: The deeding of property from the exchanger directly to the buyer (or vice versa), rather than indirectly through the accommodator.

Exchanging Up: “Exchange even or up in value; exchange even or up in equity and in debt”.

Exchanger: The client; the taxpayer; the investor.

Like-Kind Property: Like-Kind refers to the type of property being exchanged: any real estate investment for any other type of real estate investment. Example: Commercial property can be exchanged for multi-family residential property.

Qualified Intermediary: An independent middleman that facilitates the exchange process by selling the relinquished property and acquiring the replacement property on behalf of the taxpayer; also know as the Accommodator.

Qualifying Property: Property held for investment, income, or productive use in a trade or business, and not primarily for sale; also known as “like-kind” property.

Relinquished Property: Property being sold; property being replaced; old property; “downleg”.

Replacement Property: Property being acquired; target property being bought; new property; “upleg”.

Safe Harbor: A device approved by the IRS which shields the exchanger from receiving sale proceeds; a qualified intermediary is by far the most commonly used safe harbor.

Seller: Person selling the replacement property.