1031 Exchange Rules are specific IRS guidelines that dictate how like-kind exchanges must be conducted, including timelines, eligible properties, and qualified intermediaries. Related Terms
Glossary Terms: 52 terms
The 1031 Exchange Timeline is the specific deadlines investors must meet in a 1031 exchange, including identifying replacement properties within 45 days and closing within 180 days. Related Terms
1031 Exchange Timeline
Adjusted Gross Income (AGI) is the total gross income minus specific deductions. This is used to determine tax liability and eligibility for credits and deductions. Related Terms
Adjusted Gross Income (AGI)
At-Risk Rules are tax rules that limit the amount of deductible losses an investor can claim to the total amount they have at risk in the investment, including cash and borrowed amounts. Related Terms
At-Risk Rules
The Basis (Cost Basis) is the original value of a property for tax purposes, adjusted for improvements, depreciation, and certain expenses. Related Terms
Basis (Cost Basis)
Bonus Depreciation is a tax incentive that allows investors to immediately deduct a significant percentage of the cost of certain property assets in the year they are placed in service. Related Terms
Bonus Depreciation
Capital Expenditures (Capex) are long-term investments or improvements to a property that increase its value or extend its useful life. This is not deductible as immediate expenses. Related Terms
Capital Expenditures (Capex)
Capital Gains Tax is a tax on the profit realized when selling an investment property or other capital asset for more than its adjusted cost basis. Related Terms
Capital Gains Tax
The Capitalization Rate (Cap Rate) is a formula used to assess the return on an investment property, calculated by dividing NOI by the property’s market value. Related Terms
Capitalization Rate (Cap Rate)
Cash Flow is the net income that a property generates after accounting for operating expenses, debt service, and other costs. Positive cash flow indicates profitability. Related Terms
Cash Flow
A Cost Segregation Study is a detailed analysis conducted primarily by engineers to identify and classify property components for accelerated depreciation or bonus depreciation, maximizing tax benefits for real estate investors. Related Terms
Cost Segregation Study
Deferred Gain is the postponement of capital gains taxes through strategies like 1031 exchanges or installment sales. Related Terms
Deferred Gain
Deferred Sales Trust is a tax-deferral tool that allows sellers to reinvest proceeds from a property sale into a trust, delaying capital gains tax. Related Terms
Deferred Sales Trust
Depreciation is a tax deduction that allows property owners to recover the cost of a building over its useful life, excluding the land value. Related Terms
Depreciation
Depreciation Methods are approaches to calculate property depreciation, including straight-line and accelerated methods like MACRS (Modified Accelerated Cost Recovery System). Related Terms
Depreciation Methods
Depreciation Recapture is a tax imposed on the gain from the sale of a property to recover previously claimed depreciation deductions. Related Terms
Depreciation Recapture
Estate Tax Planning involves strategies to minimize taxes on property and assets passed to heirs while maximizing the value of the estate. Related Terms
Estate Tax Planning
The Excess Business Loss Limitation prevents non-corporate taxpayers from deducting business losses that exceed a certain threshold, with excess losses carried forward as a net operating loss. Related Terms
Excess Business Loss Limitation
Fair Market Value is the price a property would sell for on the open market, assuming both buyer and seller are informed and acting without undue pressure. Related Terms
Fair Market Value
The Gift Tax Exclusion allows individuals to give a set amount of money or property to others each year without incurring gift tax, helping reduce estate tax liabilities. Related Terms
