Midtown Escrow and Exchange, LLC
– Exchange Terminology
- Property that does not qualify as “like-kind” or proceeds that are received by the Exchangor, either actually or constructively. Boot is taxed at fair market value.
- Exchange Period
- A period of 180 days, beginning on the date the Relinquished Property is sold. The Replacement Property purchase must be completed within this 180 day period for the transaction to qualify for tax deferral.
- Person or entity who is seeking to defer capital gain tax through the use of an IRC Section 1031 exchange.
- Identification Period
- A period of 45 days beginning on the date the Relinquished Property is sold. The Replacement Property must be identified by Exchangor during this 45 day period for the transaction to qualify for tax deferral.
- Like-Kind Property
- Property that is of the same character as the property being sold. Generally, all real property is of the same character as all other real property. Personal property held for business purposes is not of the same character as all other personal property held for business purposes. For example, residential real property may be exchanged for commercial real property but a bus used by a transportation company may only be exchanged for another bus.
- Qualified Intermediary
- A neutral party who facilitates the exchange by having both the sale of property and purchase of replacement property flow through the qualified intermediary and provides necessary documentation to preserve the tax deferred nature of the exchange.
- Relinquished Property
- Property sold by the Exchangor.
- Replacement Property
- Property purchased by the Exchangor using the proceeds from the sale of the Relinquished Property.