1031 exchange

Definition

A tax-deferral strategy allowing investors to sell a property and reinvest the proceeds into another 'like-kind' property without immediately paying capital gains taxes. It's the IRS-approved version of kicking the can down the road.

Example Usage

By doing a 1031 exchange into a larger apartment building, I deferred $120,000 in capital gains taxes and leveled up my portfolio.

Origin

Named after Section 1031 of the Internal Revenue Code, established in 1921

Fun Fact

You have exactly 45 days to identify replacement properties and 180 days to close—deadlines that have caused more investor panic attacks than any market crash.

Source: IRS tax code and real estate investment terminology

Related Terms

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notice to quit

A formal eviction warning telling tenants to pay up, shape up, or get out. The landlord-tenant relationship's breakup letter, now with legal consequences.

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foreclose

The bank's legal power move when you can't make mortgage payments, essentially repo'ing your house and evicting your dreams of homeownership. It's the financial equivalent of 'if I can't have you, nobody can,' except it's your lender and your property. The process involves courts, judgments, and that sinking feeling that you should have read the fine print.

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encroachment

When a structure, improvement, or object from one property illegally extends onto a neighboring property. It's your neighbor's fence being three feet on your side, discovered precisely when you're trying to sell.

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Beginner

price per square foot

A metric that pretends all square feet are created equal, whether they're in a penthouse or a basement. It's the real estate version of judging a book by counting the pages without reading any of them.

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real estate owned

Property that reverted to lender ownership after foreclosure, becoming the bank's problem instead of yours. These properties are the financial equivalent of returned merchandise.

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Advanced

blind pool

A real estate investment fund where investors commit money before knowing which specific properties will be purchased. It's financial dating with a blindfold—what could go wrong?

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