1031 Exchange
Real estateGlossary term
Definition
A tax-deferred swap of one investment property for another under Section 1031 of the Internal Revenue Code. The investor must identify a replacement property within 45 days and close within 180 days. Only applies to business or investment real estate, not primary residences.
Related terms
- Capital GainsThe profit realized from selling an asset for more than its purchase price. Capital gains can be short-term (held less than a year) or long-term (held more than a year), with different tax implications.
- Real Estate SyndicationA partnership structure where multiple investors pool capital to purchase larger properties than they could afford individually. A sponsor or general partner manages the investment while limited partners provide capital and receive passive income distributions.
- Rental IncomeMoney received from tenants for the use of real estate property. Rental income is considered taxable but can be offset by deductions including mortgage interest, property taxes, insurance, maintenance, and depreciation.
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