Also known as peer-to-peer lending, investors apply online and lend money to a business and are repayed with interest on these loans.

Deferral is accomplished by substituting, or carrying over, the basis of the taxpayer’s relinquished property to the replacement property, making any necessary adjustment for additional consideration paid. The tax on an exchange transaction is not paid at the time of the transaction. Rather, it is deferred, and paid at the time the replacement property is ultimately sold.

A 1031 exchange conducted under the safe harbor 1991 Treasury Regulations wherein the replacement property is received up to 180 days after the disposition of the relinquished property. Typically what people mean when referring to a 1031 exchange, Starker exchange, like-kind exchange, delayed exchange, etc.

A Delaware Statutory Trust is a real estate investment vehicle that provides investors with access to investment grade real estate that is generally larger than they could have acquired on their own. The Taxpayer acquires a fractional interest (see below) in the property. Use of DSTs in 1031 exchanges was approved by the IRS in Revenue Procedure 2004-86.

Also known as Starker Exchange. The taxpayer disposes of the relinquished property on one day, and then has up to 180 days from that date (or the due date of taxpayer’s income tax return, including extensions, whichever event occurs first) to acquire the replacement property. The transaction must be an exchange of property for property, and not a sale of property for money that is used to acquire replacement property. An exchange occurs when the taxpayer (through the use of a Qualified Intermediary) conveys relinquished property to the same party from whom the taxpayer acquires the “replacement property.”

Also tax basis. Generally a property’s acquisition cost, subject to immediate reductions by costs to place in service and other deductions / credits. This beginning basis serves as a starting point for ongoing reductions through allowances for depreciation. After accounting for depreciation allowances, the tax basis is often referred to as the property’s adjusted tax basis.

The gradual reduction in value of an asset over time. The IRS requires investors to depreciate real estate (and certain other assets) over a specified period of time. Residential real estate uses a 27.5 year schedule, and commercial real estate uses a 39 year schedule.

The tax deduction for writing off the cost of theoretical wear and tear of property and business-assets over an IRS-specified number of years.

A procedure for collecting income tax on a gain realized by a taxpayer when disposing of an asset that had previously provided an offset to ordinary income for the taxpayer through depreciation. The difference between the asset's sale price and tax basis is "recaptured" by being reported as income.

The written identification notice prepared and delivered by the taxpayer in conformity with Treasury Regulations Section 1.1031(k)-1(c) and timely delivered to the qualified intermediary unambiguously identifying the intended replacement property.

(“Identification Period”) The period that begins on the date the relinquished property is transferred and ends at midnight on the 45th day thereafter.

At the direction of the qualified Intermediary, title passes directly to the ultimate owners without the qualified intermediary being in the actual chain of title.

Section 1.1031(k)-1(k) defines a disqualified person to include an agent of the taxpayer at the time of the transaction including a person that has acted as the taxpayer's employee, attorney, accountant, investment banker or broker, or real estate agent or broker within two years of the taxpayer's transfer of relinquished property. However, in determining whether a person is a disqualified person, services provided by such person for the taxpayer with respect to section 1031 exchanges of property and routine financial, title insurance, escrow, or trust services provided to the taxpayer by a financial institution, title insurance company, or escrow company are not taken into account.

A limited liability company (LLC) with only one member is disregarded entity. Typically, an LLC is considered a separate entity from its owners. However, a single-member LLC is not considered to be separate from its owner.

Non-profits and social organizations source money for purposes involving charitable projects.