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Real Estate Investment Glossary
Plain-English definitions of the 1031 exchange, DST, 721/UPREIT, Opportunity Zone, REIT, and tax terms accredited investors run into — each with a cited authority.
Every term below links to a full definition page with the governing IRS, Treasury, or SEC authority, related terms, and the in-depth guides that explain how it works in practice. Looking for the broader concept overview? See the strategy glossary hub or the cornerstone 1031 exchange and DST guides.
1031 Exchange
14 terms
1031 Exchange
A 1031 exchange (named for Internal Revenue Code Section 1031) lets a real estate investor defer federal capital…
180-Day Exchange Period
The 180-day exchange period is the second hard deadline in a deferred 1031 exchange. The investor must acquire and…
45-Day Identification Period
The 45-day identification period is the first hard deadline in a 1031 exchange. Beginning on the day the…
Boot
Boot is any non-like-kind value an investor receives in a 1031 exchange, and it is the portion of the transaction…
Debt Replacement
Debt replacement is the requirement, in a fully tax-deferred 1031 exchange, that the investor offset any mortgage…
Drop and Swap
A drop and swap is a technique used when real estate is held inside a partnership or multi-member LLC but the…
Improvement Exchange
An improvement exchange, also called a construction or build-to-suit exchange, is a 1031 structure that lets an…
Like-Kind Property
"Like-kind" describes the relationship the relinquished and replacement properties must have to qualify for tax…
Mortgage Boot
Mortgage boot, also called debt-relief boot, is the taxable amount that arises in a 1031 exchange when the debt paid…
Qualified Intermediary
A qualified intermediary (QI), sometimes called an accommodator or exchange facilitator, is an independent third…
Qualified Intermediary Bond
A qualified intermediary bond, more precisely a fidelity bond carried by a 1031 qualified intermediary (QI), is a…
Replacement Property
Replacement property is the new like-kind real estate an investor acquires to complete a 1031 exchange and defer the…
Reverse Exchange
A reverse 1031 exchange is a structure in which the investor acquires the replacement property before selling the…
Tenants in Common (TIC)
Tenancy in common (TIC) is a form of co-ownership in which two or more investors each hold an undivided fractional…
DST
12 terms
Beneficial Interest
A beneficial interest is the form of ownership an investor holds in a Delaware Statutory Trust (DST). Rather than…
Delaware Statutory Trust
A Delaware Statutory Trust (DST) is a legal entity formed under Delaware law that holds title to income-producing…
Distribution Yield
Distribution yield is the annualized cash distribution an investment pays out, expressed as a percentage of the…
Dst Vs Tic
DST versus TIC compares the two principal fractional-ownership structures used to acquire replacement property in a…
Full-Cycle
"Full-cycle" describes a real estate offering, most often a Delaware Statutory Trust (DST), that has completed its…
Master Lease
A master lease is a structure used in many Delaware Statutory Trust (DST) offerings to comply with the operating…
PPM (Private Placement Memorandum)
A private placement memorandum (PPM), sometimes called an offering memorandum, is the primary disclosure document…
Regulation D (Reg D)
Regulation D is a set of SEC rules that allow companies to raise capital by selling securities without registering…
Securitized Real Estate
Securitized real estate refers to ownership of real property held through a security, a financial instrument such as…
Sponsor
In real estate private placements such as Delaware Statutory Trusts (DSTs), Opportunity Zone funds, and private…
Springing LLC
A springing LLC, sometimes called a springing-LLC provision, is a contingency mechanism built into many Delaware…
Triple-Net Lease (NNN)
A triple-net lease, often abbreviated NNN, is a commercial lease structure in which the tenant pays not only base…
721 / UPREIT
3 terms
721 Exchange
A 721 exchange, named for Internal Revenue Code Section 721, lets a real estate owner contribute appreciated…
OP Units
Operating partnership units, commonly called OP units, are equity interests in the operating partnership of an…
UPREIT
An UPREIT, or umbrella partnership real estate investment trust, is a common REIT structure in which the REIT does…
Opportunity Zones
4 terms
10-Year Hold
The 10-year hold is the central tax benefit of investing in a Qualified Opportunity Fund (QOF). Under Section…
Opportunity Zone
A Qualified Opportunity Zone is an economically distressed census tract designated under the Opportunity Zone…
Qualified Opportunity Fund
A Qualified Opportunity Fund (QOF) is the investment vehicle through which capital flows into the Opportunity Zone…
Qualified Opportunity Zone Business
A qualified opportunity zone business (QOZB) is an operating business or property-holding entity that meets the…
REITs
4 terms
Cap Rate
The capitalization rate, or cap rate, is a fundamental real estate metric that expresses a property's unlevered…
FFO (Funds From Operations)
Funds from operations (FFO) is the standard measure of operating performance used to evaluate real estate investment…
NAV (Net Asset Value)
Net asset value (NAV) is the estimated per-share value of an investment vehicle's underlying assets minus its…
REIT
A real estate investment trust (REIT) is a company that owns, operates, or finances income-producing real estate and…
Tax
13 terms
Accredited Investor
An accredited investor is a person or entity permitted to invest in certain unregistered, private securities…
Accredited Investor vs. Qualified Purchaser
"Accredited investor" and "qualified purchaser" are two distinct investor-qualification standards in U.S. securities…
Adjusted Basis
Adjusted basis is an asset's cost basis, increased or decreased over time by various events, and it is the figure…
Capital Gains Tax
Capital gains tax is the federal (and often state) tax imposed on the profit realized when a capital asset, such as…
Cost Basis
Cost basis is the amount the tax law treats as your investment in a property, and it is the starting point for…
Depreciation Recapture
Depreciation recapture is the portion of the tax bill on a real estate sale attributable to the depreciation…
Net Investment Income Tax
The net investment income tax (NIIT) is a 3.8% federal surtax, enacted as part of the Affordable Care Act and…
Passive Income
Passive income, in the tax sense defined by Section 469, is income from a trade or business in which the taxpayer…
Realized Gain vs. Recognized Gain
Realized gain and recognized gain are related but distinct tax concepts, and the difference between them is the…
Regulation D Rule 506(b)
Rule 506(b) is the most widely used exemption under Regulation D of the Securities Act, allowing an issuer to raise…
Regulation D Rule 506(c)
Rule 506(c) is the Regulation D exemption, created by the JOBS Act in 2013, that permits issuers to use general…
Step-Up in Basis
A step-up in basis is the adjustment of an inherited asset's cost basis to its fair market value as of the…
Unrecaptured Section 1250 Gain
Unrecaptured Section 1250 gain is the portion of the gain on the sale of depreciable real property that is…