Carryover basis is the tax terminology used in tax-deferred exchanges to describe the transfer of the adjusted tax basis from a relinquished property to the newly acquired property. This concept is significant in deferring capital gains tax until the final sale of the property.
A Deferred Exchange, often termed as a Delayed or Tax-Free Exchange, refers to a real estate transaction facilitated under Section 1031 of the Internal Revenue Code, allowing the deferral of capital gains taxes on the sale of an investment property, provided another like-kind property is acquired within a specific timeframe.
Inventory in real estate refers to property held for sale or properties utilized in the development of goods destined for sale, which does not qualify for capital gains tax treatment.
A Qualified Intermediary (QI) is a person or entity authorized to hold funds to facilitate a Section 1031 Exchange, enabling property owners to defer capital gains taxes, particularly in delayed exchanges.
Resale proceeds refer to the amount a seller receives from the sale of a property after deducting transaction costs, outstanding mortgage, and applicable taxes. Measuring the net financial benefit, it is essential for homeowners and investors alike.
Section 121 of the Internal Revenue Code pertains to the exclusion of gain from the sale of a principal residence. It provides guidelines on the criteria and limitations for income exclusion, ensuring taxpayers benefit from tax relief on qualifying property sales.
A Starker Transaction, also known as a delayed tax-free exchange, is a method used in real estate to defer the payment of capital gains tax on the sale of an investment property by using the proceeds to purchase a like-kind property.
A stepped-up basis is an adjustment to the tax basis of inherited property, increasing the basis to the property's fair market value at the time of the original owner's death, thus minimizing capital gains tax for the heirs.
Taxes that apply to the sale of a home, governed primarily by Section 121 of the U.S. Internal Revenue Code, which provides an exclusion on capital gains for qualifying homeowners.
A Tax-Deferred Exchange, often referred to as a 1031 exchange, allows investors to defer paying capital gains taxes on real estate investments when one property is sold and a similar one is purchased within specified time frames.
