GLOSSARY OF TERMS - S

The Treasury Regulations provide certain safe harbors that assist Qualified Intermediaries and investors in structuring tax-deferred, like-kind exchange transactions so they can be assured that no constructive receipt issues will be encountered during the exchange cycle.

The rate a low risk, liquid investment achieves.

The brokerage commissions and fees, and any additional transaction costs that are incurred during the sale of the property.

A way to determine market value by comparing a subject property to properties with the same or similar characteristics

An estimate of value derived by comparing the property to similar properties that have been sold recently, applying appropriate units of comparison, and making adjustments to the sales prices of the comparable based on the elements of comparison.

A transaction in which an owner sells an improved property and as part of the same transaction signs a long-term lease to remain in possession of the property.

The sale proceeds before tax minus the tax liability on the sale.

Part of IRS Code that deals with exclusion of capital gain on the sale of primary residence. Generally, a Taxpayer can sell real property held (owned) and used (lived in) as a primary residence and exclude from gross income up to $250,000 in capital gains if the Taxpayer is single and up to $500,000 in capital gain taxes if the Taxpayer is married and filing a joint income tax return. The Taxpayer is required to have (1) owned and (2) lived in the real property as his or her primary residence for at least 24 months out of the last 60 months (two out of the last five years). The 24 months do not need to be consecutive and there are certain exceptions to the 24 month requirement when a change of employment, health, or other unforeseen circumstances has occurred. Taxpayers can complete a 121 exclusion once every two (2) years.

Part of IRS Code that deals with installment sales of investment property. Taxpayer may defer capital gains income tax liabilities when carrying back a promissory note on the sale of an investment property. Taxes are deferred until principal payments are received over the term of the promissory note or note is sold and made part of exchange or note is assigned to the seller as a down payment on the replacement property. Depreciation recapture can not be deferred with an installment sale and would be recognized in the year of sale.

Indirectly investing in real estate markets (for example, investments made collectively with pooled money or the use of investment packages/funds, such as mortgage backed securities sold on the secondary financial market) as opposed to direct investments where investors own property or hold mortgages; a long-term trend that has had significant impact on real estate values. Nature of investment can create major risk if assets improperly categorized and bundled.

When the buyer of a property gives the seller of the property a note, secured by a deed of trust or mortgage. In a Section 1031 Exchange, seller carry-back financing is treated as boot, unless it is sold at a discount on the secondary market or assigned to the seller as a down payment on the replacement property.

The process of recalculating outcomes under alternative assumptions to determine the impact of the variable under analysis.

The former practice of transferring or deeding title to an investor's relinquished property to the Qualified Intermediary first and then sequentially and immediately transferring or deeding title from the Qualified Intermediary to the buyer in order to properly structure a tax-deferred, like-kind exchange prior to the issuance of Treasury Revenue Ruling 90-34. See "Direct Deeding" for the current-day practice. Sequential deeding is used only in special tax-deferred, like-kind exchange transactions today that require special structuring.

A tax-deferred, like-kind exchange transaction whereby the disposition of the relinquished property and the acquisition of the replacement property close or transfer at the same time. A simultaneous exchange is also referred to as a concurrent exchange.

The identification and evaluation of a site or sites to satisfy a given purpose. Included in the analysis are competition for the given use, median household income and population growth.

Site-specific factors, features, conditions, or attributes which are important in the analysis or evaluation of a location/site (including relative location, visibility, aesthetics, landscaping, condition of existing structures, regulatory mechanisms, and lot size).

Pension funds, REIT equity funds, Life Companies, Foreign Investors, Individuals, Syndications and Partnerships.

Limited agent. Authorized to represent the principal in one specific act or business transaction only, under detailed instructions, i.e. real estate agent.

Property where all renovations have been completed, occupancy and rental rates are in line with current market conditions and expenses are normalized. See added value properties.

A measure of the amount of dispersion or variation of data points or values about the mean.

A classification scheme used for general recording purposes by government and industry to categorize and account for economic and employment activity by sector using a series of standardized and universally accepted codes.

Another common name for the tax-deferred, like-kind exchange transaction based on a court decision that was handed down (Starker vs. Commissioner) in 1979. The Ninth Circuit Court of Appeals eventually agreed with Starker that its delayed tax-deferred, like-kind exchange transaction did in fact constitute a valid exchange pursuant to Section 1031 of the Internal Revenue Code. This ruling set the precedent for our current day delayed exchange structures.

Drawing a reasonable conclusion or deduction from statistical evidence based on sample statistics, while attaching a statement as to the likelihood that an assertion made about a given statistical population is true (in probabilistic terms).

The adjustment of the value of an appreciated asset for tax purposes upon inheritance. The step-up reflects value of the asset at time of inheritance, not when property was originally purchased.

Any shopping area comprised of a row of stores but smaller than a neighborhood center anchored by a grocery store.

The amount of property made available for sale or rent at a given price or rental rate.