Glossary of terms

Boot

Any property received in an exchange that is not considered "like-kind" to the property sold. This amount may be subject to tax.

Delayed Exchange

Exchange where Relinquished Property is sold to one party followed by the purchase of Replacement Property from a different party within the 180-day exchange period.

EAT

Exchange Accommodating Title Holder. This refers to the special purpose entity formed by the Intermediary to facilitate a reverse exchange.

Exchange Agreement

Written agreement between Investor and IES that meets the requirements of Internal Revenue Code Section 1031. The Exchange Agreement must be signed prior to or at the closing on the Relinquished Property.

Exchange Expenses

New definition of Exchange Expenses:
Transactional costs deductible in connection with the Exchange that should generally include costs that are:

A direct cost of selling real property, which typically include:

Real estate commissions
Title insurance premiums
Closing or escrow fees
Legal fees
Transfer taxes and Notary fees
Recording fees

- or -

Costs specifically related to the fact the transaction is an exchange such as the Qualified Intermediary fees.

Costs related to obtaining the loan are not considered Exchange Expenses and should not be deducted from the Exchange Proceeds. Other non-exchange expenses include:

Mortgage points and assumption fees
Credit reports
Lender's title insurance
Prorated mortgage insurance
Loan fees and loan application fees
Property taxes
Utility charges
Association fees
Hazard insurance
Credits for lease deposits
Prepaid rents and security deposits

Exchange Proceeds

Net equity received by Investor from the sale of the Relinquished Property. This amount represents the Investor's equity after payment of mortgages and Exchange Expenses. The Exchange Proceeds are transferred to the Intermediary at the closing of the Relinquished Property and thereafter transferred from the Intermediary to the closing on the Replacement Property.

IES

Investor Exchange Services, Inc., a full service qualified intermediary.

Intermediary

Company selected by Investor to assist in facilitating the exchange. The Intermediary will prepare all the necessary paperwork for the exchange and hold the Exchange Proceeds.

Improvement Exchange

Exchange where Investor wants to utilized some of the Exchange Proceeds to make improvements to the Replacement Property or where Investor needs improvements to the Replacement Property in order for the Replacement Property to be of greater value than the Relinquished Property.

Investor

Taxpayer that holds title to the Relinquished Property and wants to initiate the exchange.

QEAA

Qualified Exchange Accommodation Agreement. Written agreement between the EAT and Investor in connection with a reverse exchange.

Relinquished Property

Investment or business property that is being sold by Investor as part of the exchange.

Replacement Property

Investment or business like-kind property being acquired by Investor as part of the exchange.

Reverse Exchange

Exchange where Investor must acquire the Replacement Property prior to the sale and closing of the Relinquished Property.

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