Definitions:

Basis - Value of investment property used to calculate taxes. Generally, the price paid for a property, less depreciation, plus the cost of improvements.

Boot - Market value of non-qualifying (non-real estate) goods received in an exchange. The items are taxable. Boot includes exchange proceeds not spent on the purchase of upleg properties.

Equal Value - Similar adjusted market values of two or more properties. The property you are exchanging into must have an equal or greater value than the relinquished property.

Exchange Proceeds - Net proceeds of relinquished property. All of these proceeds should be re-invested in replacement property/properties to avoid taxation.

Identification of Replacement – The process for choosing a qualifying "replacement property."

One of three criteria must be met:

· List any three properties as likely replacement.

· List any number of properties with combined market values not exceeding 200% of market value of relinquished property.

· Identify any number of properties so long as 95% of the combined value of such properties are received (purchased) during the exchange period.

Like-Kind - Of similar type. Properties located within the USA held for investment or held for productive use in a trade or business. Does not include personal-use or inventory property.

Relinquished Property - Property you are selling and transferring gains to other property. Also known as "down-leg"

Replacement Property - Property acquired by means of the 1031 Exchange. This property is also known as your "up-leg" property. It must be of "like-kind."