Real Estate Glossary Terms Beginning With – I

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Terms Beginning With - I

Property Development & Investment Glossary, Terms & Definitions


An L-shaped cross-sectional steel beam. For longer spans, it is employed on wide wall openings (such as a double garage door) or basement beams when the roof and wall loads bear down over the opening.

Idem sonans

Having the same sound. Legally, misspelt names don't have to make an instrument invalid as long as the written name sounds the same as the correct name and there is no proof that the misspelt name was meant to trick someone. An important rule in title insurance practice.

Identity theft

The purposeful act of assuming another person's identity in order to acquire access to their credit by using that person's information, such as birth date, Social Security number, address, name, and bank account information. On average, the theft occurred more than 14 months ago, and victims must usually prove that they did not commit the fraud in order to reclaim their identity and excellent credit ratings. The Fair Credit Reporting Act (FCRA) gives victims certain rights, such as putting "fraud alerts" in their files and having unfettered access to all information.


Structural building component in the form of a "I" manufactured by a manufacturer. Floor joists and rafters are made from it.


It is difficult to convert into cash.


It's hard to sell an asset quickly for its full value. Because there aren't enough assets that can be quickly turned into cash.


Someone who has never learnt to read or write. Contracts can still be entered into by an illiterate.


Unstable or unsustainable conditions resulting from a mismatch between supply and demand for commercial real estate in any and all subcategories across one or more geographic submarkets over a specified time period.

Immediate family member

In the eyes of the lender, the borrower's spouse, parent, stepparent, legal guardian, grandparent, brother, sister, or child.

Impact fees

A tax levied by a community and paid by a developer that is proportionate to the externalities caused by a development. Intended to cover the impact of the growth on items like roads, sewer systems, tools, and police and fire protection.

A municipal charge levied against new residential, industrial, or commercial development projects to pay for the increased expenses of public services caused by the new development. Such indirect service obligations would cover the price of connecting water and sewer lines.

Imperfect market

A market where buyers and sellers may exert undue influence due to product differentiation and a lack of transparency. An imperfect market governs the purchase and sale of commercial real estate.

Impervious cover

Any hard surface material, such as concrete or asphalt, that reduces stormwater infiltration and causes high runoff rates.

Implicit transfer costs

Indirect expenses of transporting products or persons between linked locations. Although they are sometimes more difficult to discover than explicit transfer costs, they may also be greater.

Implied agency

Actual agency that can be deduced or inferred from other facts and circumstances, including what the parties say and do (i.e., implied in fact through behavior).

Implied contract

An unwritten contract derived from the parties' behavior. Such an agreement is inferred from the parties' actions rather than formed by word or writing. A contract in which the terms have been understood and agreed to but are not fully mentioned in the agreement. It should be noted that, for obvious reasons, this is not a particularly businesslike or effective way of conducting real estate transactions.

A contract implied by law is one that is not regarded to have been intended by the parties but is created by the law in the interest of justice and equity. Also known as a quasi-contract.

Actions generate a contract that isn't always written or stated.

Implied easement

A right of use that is not created by an express deed or an express provision in a deed. It is frequently made when a subdivision map is released in the public domain.

An implied easement is one that is created by the actions or inactions of one or both parties. People who buy mineral rights to land also get an implied easement to enter the land and take what they want from it.

Implied listing

A listing that is implied by the actions of the parties. In some states, a listing that is implied by the actions of the broker and the seller may be legally binding even if it is not in writing. In many other states, however, listing contracts can only be enforced if they are written and everyone who signs them gets a copy. No listing agreement can be assumed.

Implied warranty

A legal warranty that is not recorded but exists.

Implied warranty of habitability

A legal concept that says the landlord has to make the rented space ready to live in and keep it in good shape for the whole length of the lease. This is the opposite of the common-law caveat emptor doctrine, which said that the landlord had no responsibility and the tenant had to take the place "as is," regardless of whether it was safe to live in.

Many state landlord-tenant laws say that the landlord must make and keep the place in a habitable condition by making all repairs and arrangements that are needed. The landlord has to protect the tenant from all latent defects, which are problems that aren't obvious and that the tenant couldn't be expected to know about.

Recently, it was decided that the implied warranty of habitability applies to both the seller and the builder of a new home. This means that the seller or builder can be held responsible for any flaws that make the home unfit to live in. For example, courts have said that the implied warranty of habitability protects people who buy new condos with broken air-conditioning systems.


To hint, suggest, or communicate anything by conduct or acts that lead to a logical conclusion rather than an express assertion. Most real estate transactions must be expressed, rather than assumed, and in writing.

Impound account

A trust account, also known as an escrow account, is one that is set up to save money for future needs related to a piece of real estate. To safeguard their security from defaults, tax liens, and catastrophes, most mortgage lenders require an impound account to cover future payments for taxes, assessments, private mortgage insurance, and hazard insurance. When the property is sold and the buyer takes over the seller's mortgage, the lender normally does not refund the escrow account balance to the owner. The lender retains the funds, and it is the buyer's and seller's responsibility to prorate the balance between them. FHA loans necessitate the establishment of impound accounts. The amount of reserves in the impound account is limited by RESPA to 1/s of the expected amount of taxes and insurance due in the 12-month period beginning at settlement.

Part of the purchase price owed to the seller may be detained or set aside by escrow to cover post-closing expenses such as clearing title or fixing the structure.

The usage of reserve fund interest is a frequently disputed topic. Some states, although not all, compel lenders to pay borrowers interest on money retained as reserves.

A federal agency established in 1965 to aid in the construction of housing in the United States.

Improved land

As opposed to bare land, real property whose value has been increased by the addition of on-site and off-site amenities such as roads, sewers, utilities, and buildings.

Improvements have been made to the land.

Improved property

Developed land


Buildings, roadways, and utilities are examples of additions to bare land that tend to improve its value.

Additions made to property that are more than just repairs and cost time and money. They are meant to increase the value of the property or extend the time it can be used. Land can be made better by grading, building sidewalks, sewers, streets, utilities, and other things. Land can be made better by adding buildings, fences, rooms, new roofs, and other structures. A change to the surface of the land, like an irrigation channel, could also be an improvement.

Modern methods of valuing things say that the value of an improvement is usually based on what it adds to the land in terms of income or conveniences. There should be a reasonable connection between a site and the kind of improvement that is put on it. The value of a lot and the building on it goes down if the improvements are too many, too few, or in the wrong place.

For income tax purposes, most improvements must be capitalized, and the costs must be deducted over a period of years. On the other hand, maintenance and repairs that do not increase the value of the property can be deducted as business expenses in the year they are made.

Improvements on the land

Buildings, fences, walls, and decks are examples of permanent structures.

Improvements to the land

Curbs, sidewalks, roadways, lighting, and sewers are often publicly owned infrastructure that are built to allow the development of privately held land.

Infrastructure that is required to make the land appropriate for building development or other purposes, such as streets, pathways, utilities, storm water drainage systems, and other systems that may be required for land usage.

Imputed interest

Legal interest is suggested. When an installment contract, such as a land contract or a mortgage note, fails to indicate an interest rate or sets an unreasonable low rate, the IRS imputes, or assigns, interest at a predetermined rate ( computed semiannually). The applicable federal rate is established by the IRS and published monthly, depending on the period of the note. This regulation does not apply to installment sales that are less than $3,000.

Section 483 of the Internal Revenue Code, "Interest on Certain Deferred Payments," and Sections 1271 through 1274, original issue discount standards, prohibit the seller from recognising the portion of the selling price that truly represented interest on deferred payments as capital gain. They prohibit deferred payments from being considered entirely as principal. Prior to the passage of these sections, parties to a real estate installment transaction would routinely exclude interest from the contract and raise the purchase price to compensate.

Buyers may deduct the imputed interest per annum on unpaid accounts for tax purposes even if no interest is paid. The buyer may not only carve out an interest deduction but also reduce the basis of the property acquired by reallocating the face amount of the note to part interest and part principal (buyer and seller agreement).

Imputed notice

Because of their agency relationship, an agent's information is binding on the principal. If, for example, the buyer's agent is advised of the seller's acceptance of the buyer's offer, the buyer cannot later withdraw the offer even if the buyer has not received actual notice of the contract's acceptance.

In-house sale

A sale in which the listing broker is the sole broker participating; no outside brokers are involved, as in a cooperative sale. The buyer is found by either the listed salesman or another salesperson working for the listing broker. The issue of dual agency arises if the buyer is a client of the broker.


What happens when people move into a certain area from elsewhere (i.e., when there is an influx of people into a particular area).

In-parallel activity

Activities that take place concurrently.

In-series activity

Activities that occur one after the other in a straight line.

In-service loan

Under Section 222 of the National Housing Act, this is a programme that allows the departments of Defense, Transportation, and Commerce to pay the HUD mortgage insurance premium on behalf of active-duty military personnel under their control. Mortgages can be used to pay for single-family homes and condos that are covered by standard HUD mortgage insurance programmes.

In-the-door approach

Using estimates for the share of traffic that stops at or patronizes a retail establishment or shopping centre and the share of foot traffic that converts to sales, one can get a good idea of the trade area (and sales/revenue potential) for a particular location.

Inactive license

A real estate license that is no longer active. In several states, a real estate licensee can deactivate their license. During this time, the licensee may not conduct any real estate business, including splitting referral money with active licensees. The licensee is normally required to continue paying license costs, albeit many jurisdictions charge a lower fee than an active license.

Incandescent lamp

Using an electrically charged metal filament that emits white light.


An unfinished, defective interest, began but not finished. In most places where dower is recognized, a wife's stake in her husband's lands during his lifetime is considered an inchoate dower interest. A husband's curtesy right, on the other hand, is normally not an inchoate right; it takes effect only upon the death of the wife. Also refers to a mechanic's lien that has not yet been filed but will take effect once filed and is related to the visible start of work.

Inclusionary zoning

A land-use idea in which local zoning laws require residential developers to build a certain number of homes for low-income and moderate-income families as a condition of getting government approval to build the project. In some places, developers can pay a fee instead of setting aside space for low-income or moderate-income units. Some communities have even tried to make resale price controls a requirement for developers to get a permit.


All money received from any source, unless explicitly excluded by provisions of the Internal Revenue Code, is considered for purposes of assessing federal income tax liability.

The income that an investment property generates.

Income and expense report

A monthly financial report that shows how much money the property makes, how much it costs to run, and how much money goes to the owner.

Income approach

A way to figure out how much a piece of real estate is worth by looking at how much net income it will make over the rest of its economic life. With this method, the market value is equal to the present value of the net income that will be made in the future. When using the income approach to value, there are four main steps.

1. Estimate the potential gross annual income, or the money that would be made if all of the units were rented out at their market value.

2. Figure out the effective gross income by subtracting an amount for vacancy and collection loss from the gross income.

3. Take the annual operating costs and subtract them from the annual net operating income.

4. Take the annual net income and multiply it by the right capitalization rate.

The hardest part of this process is figuring out what the right capitalization rate is. This rate must be chosen so that it accurately shows how much of the original investment will be recouped over the useful life of the improvement, giving the investor a good rate of return on the original investment and allowing for the return of any borrowed money. Note that an income property with a lot of risk usually needs a higher rate of return than an investment that is "safe." The appraiser must use residual methods to figure out how to get back the money spent on the improvement, but not on the land, which is not a wasting asset.

The main benefit of this method is that it comes closest to what a typical investor in income-producing property who wants to make money on their investment hopes for. It is rarely used in homes with only one family living in them.

When the revenue is capitalized at the current market rate for the kind of property, an appraisal technique is utilized to evaluate value based on the income generated.

Income averaging

A means of lowering income taxes, particularly for those who earn a disproportionately large amount of money in compared to the previous four tax years.

For most taxpayers, income averaging has been eliminated, while it remains applicable to farmers and fishermen.

Income capitalization

The process of transforming recurring revenue into an estimate of value.

Income capitalization approach

A technique for estimating the worth of an income property based on its expected future net operating income. For the estimated price, the cap rate is applied to the NOI. Valuation formula: NOI multiplied by the capitalization rate

Income multiplier analysis

A method of expressing the connection between pricing and gross or net income.

Income property

Real estate has the potential to generate money.

Property that is bought mostly for the income it will bring in and for some tax benefits. Commercial, industrial, or residential property can be used to make money.

Income return

The difference between the value at the start of the measurement period and the net rent or net operating income (NOI) obtained throughout the measurement period.

The money that is created on a regular basis as a result of an investment.


A person who doesn't have the legal right to do something, or who doesn't have the power to do something legally. This could be because of mental illness, a physical disability, drugs, old age, or something else. A person who doesn't have enough understanding or capacity to make or communicate responsible decisions about himself. So, people who are crazy or, in some cases, drunk can't make legally binding contracts. A corporation that isn't allowed to buy real estate by its articles of incorporation can't sign a contract to buy real estate. In the same way, a company officer can't sell corporate real estate if the board of directors hasn't given them permission to do so. A person who can't read or write, on the other hand, can still sign a contract as long as she knows what she's doing. If a person is found to be incompetent, the court usually appoints a guardian to do business with everyone who does business with the incompetent person. incorporate


To create a corporation, you need to write up the articles of incorporation and file them with the state's business registration division.

Incorporation by reference

A means of incorporating all of the provisions of one document into another simply by reference. A sales contract, for example, may refer to an addendum or Exhibit A and incorporate the terms of such addendum to the same extent as if it were fully set forth.

A short-form mortgage or lease may relate to a previously recorded lengthy agreement that contains several "boilerplate" mortgage or lease clauses.

Incorporeal interest

In property investment, a non possessive right.

Incorporeal rights

Ownership of intangible rights in real property like easements and licenses; no physical body to speak of. Future rents and future profits are examples of these rights.


An increase in number or size. Often used to describe how large subdivisions are built in stages, or in increments.

Incubator buildings

Multitenant structures that are relatively small in size, in which new or tiny but growing businesses rent space on an interim basis until their expansion necessitates the need for larger quarters.

Incubator space

A building in an industrial park that is broken up into small units of different sizes to help young, growing businesses that want to combine office and industrial space in one place.

Incurable depreciation

A flaw that cannot be fixed or is not economically feasible to fix.

Incurable obsolescence

An appraisal term that means an improvement is no longer useful from the outside or inside and can't be fixed or fixed economically. If the value drop is due to functional obsolescence, it is considered incurable if it would not be worth the cost to fix it. Most external obsolescence can't be fixed.


An agreement to pay someone back or make up for a loss. For instance, a buyer of commercial property might want the seller to protect the buyer from claims that come from finding dangerous substances on the property.


To safeguard another person against harm or loss.

Indenture deed

A deed in which both the grantor and the grantee agree to do things for each other. Usually, only the grantor needs to sign a deed, which is called a "deed poll." However, a "indenture deed" also needs to be signed by the grantee, who may agree to take over the mortgage or agree to certain rules. The word "indenture" comes from an old practice in which each party's contract was written on a single sheepskin and then torn apart along an uneven line. They could later show that they were real by matching their contracts. Many leases that both the lessor and the lessee have to sign start with "This Indenture..."

Independent appraisal

An evaluation done by a qualified person with no vested interest.

Independent contractor

One who is hired to do something, but who is controlled and directed by someone else only in terms of the end result and not in terms of how she does the thing. The main difference between an independent contractor and an employee or agent is how much control the employer has over the activities of the independent contractor. According to how the FICA and income tax laws are written or interpreted, an employer must pay income tax and Social Security taxes on commissions paid to an employee but not to an independent contractor, who must pay FICA and taxes on their own.

Under IRS Section 3508, real estate licensees have been able to keep their status as independent contractors since 1982, but only for income tax purposes. There are three things that must be in place for a salesperson to be considered an independent contractor: (1) a written contract, (2) a real estate license, and (3) payment based on performance, not the number of hours worked.

Most of the time, the person who hires an independent contractor is not responsible for injuries that the independent contractor causes because of their own carelessness. On the other hand, an employer is responsible for what an employee does in the course of their job. So, an employer would be responsible for an employee's car accident that happened while the employee was driving on company business. Because figuring out whether a real estate salesperson is an employee or an independent contractor is a complicated process, most brokers carry public liability insurance that covers all of their salespeople and office staff. Also, many brokers ask their salespeople to put the broker on their personal auto policies as a "additional insured."

Many licensing laws make brokers responsible for what their salespeople do, even if they are considered independent contractors. Because of this, many brokers want to have a lot of control over what their salespeople do. But state licensing laws don't stop someone from being an independent contractor for tax purposes, as long as the relationship is set up carefully so that the person can't be mistaken for an employee. In these situations, a broker should always talk to a tax lawyer.

A freelancer or self-employed contractor.

Independent variable

A variable in regression or correlation analysis whose value is assumed to be determined by factors other than those under consideration, but which is thought to influence the value of one or more other variables (the dependent variables) in the analysis.

Variables in a regression equation that are thought to explain a portion of the variance in the dependent variable.


A metric that indicates the present state of the economy or finances.

An adjustable-rate loan's monthly payment adjustments are based on an interest rate or adjustment standard.

Index rate

An interest rate decided by the market that serves as the "moving portion" of an adjustable interest rate.

The rate that a loan's interest rate is tied to when the rate changes. As the index rate goes up or down, the borrower's interest rate goes up or down at set times. The interest rate on one-year U.S. Treasury securities, the Treasury constant maturity series, and the LIBOR are all popular indices (London Interbank Offered Rate).

Indexed lease

Rent can be adjusted based on a price index such as the Consumer Price Index in a lease agreement. Tenant-related factors should be taken into consideration while creating the escalation index. The CPI (consumer price index) and WPI (wholesale pricing index) are the two most widely utilized indices. The index lease is also known as an escalation lease because of the escalator clause that links the rent to the index. LIBOR stands for the London Interbank Offered Rate, an abbreviation of the name.

Rent increases in an indexed lease are linked to changes in a regularly published index. For example, if the consumer price index (CPI) climbed 4% in the first year of the lease, the rental rate on a lease linked to the CPI may rise 4% in the second year of the lease.

A contract in which the lease rate can rise or fall at predetermined intervals depending on a predetermined index.

The rent in a rent-to-index lease is calculated based on the change in an index, usually the consumer price index, over the term of the lease.

Indexed loan

A loan whose interest rate can rise or fall at predetermined intervals based on a predetermined index.

Indicated value

The final amount estimate for the subject property as a consequence of one of the key methodologies used in the appraisal process.

The value of a property based on recent sales of similar properties, the cost of the property now minus depreciation and the value of the land, and the capitalization of the annual net operating income.

Indifference curve

A graphical representation of two-variable value combinations that represent the preferences of an individual who will be indifferent to the various combinations.

Indirect costs

To create a corporation, you need to write up the articles of incorporation and file them with the state's business registration division.

Indirect lighting

The light that bounces off the ceiling or something else outside of the fixture.

Individual metering utility system

Each renter has their own utility metre in this metering scheme.

Individual retirement account (IRA)

A programme for saving for retirement that can be either a "individual retirement account" or a "individual retirement annuity." There are different kinds of IRAs, including traditional, Roth, SIMPLE, and SEP. Individual taxpayers can set up traditional and Roth IRAs, and they can put up to 100% of their pay (or 100% of their self-employment income if they are a sole proprietor or partner) into them. Since Roth contributions are not tax-deductible, qualified withdrawals are not taxed. Both SEPs and Simples can be set up by employers.

First-time homebuyers (those who haven't owned a home in the last two years) can take up to $10,000 from their own, their parents', or their grandparents' retirement accounts without having to pay a 10% penalty or taxes. This money can be used for the down payment and closing costs.

Indoor air quality

When there are pollutants in the air inside a building. Tobacco smoke, biological contaminants, formaldehyde, carbon monoxide, organic gases (paint, solvents), radon, and asbestos are the main things that pollute the air inside.

As part of their due diligence when buying a commercial or industrial building, buyers should think about hiring outside experts to do air-quality surveys inside the building. The survey could include questionnaires for tenants and employees, ventilation studies, and sampling of certain contaminants.

When buildings are sealed to save energy, they can also keep in pollution. Indoor air quality problems are caused by things like buildings being used in a way that was not intended, old and dirty ductwork, new materials that give off formaldehyde fumes, and damp and dirty areas. Some experts call the problem "sick building syndrome," and headaches, tiredness, and trouble breathing are some of the signs.


Points in a lease or sales contract agreement that can be negotiated in the tenant's/favor buyer's and utilized to persuade them to sign the contract.

Industrial broker

A commercial real estate broker who focuses on industrial properties.

Industrial development bond (IDB)

A bond issued by a municipal or state government to assist in the financing of an industrial plant or facility that will be leased to a private company.

Industrial district or park

A planned park-like complex that is intended to accommodate specialised industries. It is responsible for all public utilities, roadways, railroad sidings, and other infrastructure.

Industrial gap

The gap between the need for and availability of industrial real estate in a particular market or region.

Industrial location decision-making

Site selection refers to the decision-making process in which potential sites for an industrial activity are researched and evaluated based on criteria such as their proximity to relevant resources and the level of competition in the market.

Industrial gap

The gap between the need for and availability of industrial real estate in a particular market or region.

Industrial location decision-making

Site selection refers to the decision-making process in which potential sites for an industrial activity are researched and evaluated based on criteria such as their proximity to relevant resources and the level of competition in the market.

Industrial Park

A significant development over a vast region geared to the needs of business (such as water, roads, or landscaping)

A large area of land that has been made ready for a variety of light industrial and manufacturing jobs. Users can either buy or rent a site.

A business park is an area that is zoned for industrial use and has sites for many different businesses. It is developed and managed as a single unit, usually with common services for its users.

Usually, an industrial developer buys a large piece of land (usually between 400 and 500 acres), gets it zoned for industrial use, and builds roads, water and sewer systems, and other utilities. The developer then files a declaration of restrictions that sets up a property owners' association and regulates things like setback lines, landscaping, architectural styles, and so on. The developer might sell a site to an industry that will build its own plant, or the developer might build the plant and rent it to the industry. When you buy a site in an industrial park, you can avoid the problems and costs that come with buying ready-made industrial property. You can also save money by sharing costs for sewers, security, utilities, and other things.

A designated area for industrial purposes.

Industrial property

Warehouses and buildings that contain light manufacturing are included in this property categorization.

Real estate designated for industrial use, such as manufacturing or warehousing.

Industrial and manufacturing facilities and distribution centres are examples of commercial properties.

Industrial service area

The market segment that has enough qualified workers (or other resources) to sustain a particular type of manufacturing or other industrial endeavour.

Industry economies of scale

The development of an industry inside a community that results in unique resources and cost advantages for that business.

Inferential statistics

The process of forming conclusions based on evidence included in statistical data.

Inferior goods

Consumer items whose demand falls as buying power grows.


The gradual change of a neighbourhood as a result of people moving out or changing how the property is used. This is caused by changes in the economic, social, and physical forces in the area.

The movement of air from one place to another, as in the case of a draught coming from a crack, seam, or hole in a building.

Infiltration capacity

The rate at which a surface substance absorbs water; measured in inches or centimetres per minute or hour.


A rise in prices across the board, resulting in a reduction in buying power.

Inflation guard

An add-on to an insurance policy that automatically increases coverage by a certain amount each quarter for the life of the policy, based on what the insured chooses.

Inflation risk

The possibility that overall inflation in the economy may be higher or lower than projected.

The possibility of real estate losses as a result of changes in nominal rates.


Consumers who live outside the trade region spend money on retail. 

Information search costs

The expense of gathering relevant market data. High information search costs have a negative impact on market efficiency.

Informed consent

Consent to a certain act granted following complete and fair disclosure of all facts required to make an informed decision. Only individuals with sufficient reasoning abilities who understand the ramifications and long-term consequences of an activity can provide informed consent.

Infrared film

Photographic film that can capture near-infrared radiation Gusts that extend beyond the visible spectrum to a wavelength of 0.9 micrometres) but are incapable of capturing thermal infrared wavelengths.

Infrared image

A picture captured within a wavelength range of approximately 0. 7 millimetres to an undefined upper border, which is sometimes fixed at 2.6 millimetres. Photographic infrared ranges from 0.7 to 2.6 millimetres, whereas thermal infrared ranges from 2.6 to 13.5 millimetres.

Infrared radiation

Longwave radiation with wavelengths between 3.0 and 4.0 and 100 micrometres is the most common, although near-infrared radiation with wavelengths between 0.7 and 3.0-4.0 micrometres is also present.


A municipality's services and facilities include roads, highways, water, sewerage, emergency services, parks and recreation, and so on. This service is also available on a private basis.

The physical infrastructure of a city, including streets, highways, sewage and drainage systems, and other public services, is required to house a large number of people.


A way to get into a property. In contrast to egress.

An area that is used for both entering and exiting; the right to enter or leave.

Inheritance tax

A "death tax" is a fee that the state charges people who are going to inherit property. The tax is not put on the property itself. Instead, it is put on the heirs for their right to inherit the property. So, the rates or deductions may be different depending on how close the relationship is.

When a person dies, a statutory lien is usually put on all of the real property that person owned. This lien stays in place until the inheritance taxes are paid and a "tax clearance" is given. This is true even if the property was owned by two people with the right of the last person to own it.

Initial investment

The amount of money needed to purchase an investment.

Initial tax basis

A property's tax basis at the time of acquisition. Cost + any further expenditures necessary to guarantee good and defensible title.


A short form of a name. Initials can work as a person's signature as long as the person who signs them means for them to be the same as that person's legal signature.

All parties to a contract should sign and date any changes to it. Most of the time, a notary must sign off on all changes made to a document. If they don't, the document might not be accepted for recording. A safe way to sign a long document is for everyone to put their initials on each page. Some people do this on purpose.

In the more formal Torrens system of title registration, the recorder won't usually accept a document for recording if the parties haven't signed it with their full names; initials aren't good enough. If an initial is the only part of a given name, or if a person doesn't have a middle name, that should be written on the document. In the same way, the full name of the principal must usually be written on a power of attorney used to sign documents.


A legal action in which a court issues a writ that either tells a defendant not to do something or forces the defendant to do something. With an injunction, the person to whom it is given is told to stop doing something, like breaking rules about pets in the deed or house rules. family apartment Look up granny flats.

Inner city

A neighbourhood that most people agree is the centre of a city's residential or business life, even if it doesn't have clear political, geographical, racial, or economic boundaries.

An older neighbourhood in a city near the core business sector.

Innocent misrepresentation

An unintentional misstatement of a material truth.

Innocent purchaser for value

One who buys real estate without being aware, either directly or indirectly, of any rights or interests that are more important than theirs. The purpose of state recording laws is to protect an innocent buyer from a previous buyer's secret claims. Also known as a "true buyer for value."

Input-output modeling

In economics, a mathematical model is a way to describe a local or national economy that explicitly accounts for the flows and links between different economic sectors. In order to analyze the direct and indirect effects of a change in a given sector or region, it is necessary to estimate sector- and region-specific multipliers, which take into account the fact that the output (products and services) of one sector may require the production inputs of other sectors.

Inquiry notice

Legal notice is what the law assumes when there are signs that would make a reasonable person want to find out more. For example, if someone is living in the property that is for sale, the buyer is expected to know everything that an inspection of the property would have shown. Buyers take title subject to the rights of the occupant.


The European Association for Non-Listed Real Estate Vehicles is a group of investors that invest in non-listed real estate vehicles.

Inside corner

Corner of a room where two walls meet to produce an internal angle.

Inside lot

Any lot between the front and back lots on a given block; inner lot.

Insider rights

The exclusive right to buy their flats for a limited time and usually at a discounted price are granted to tenants occupying a part of a building that is being converted into a coop or condo.


An inspection of a certain location. Before signing the dotted line, a buyer should always check the property. An inspection is critical in determining if anybody else has a claim to the property, as possession of the property serves as constructive notice. Any encroachments or unregistered easements may also be discovered during an inspection. To ensure that any claims to prospective purchasers are accurate, a broker should conduct a thorough inspection of the advertised property.

The inclusion of a clause in the sales contract stating that all appliances, electrical fixtures, and plumbing fittings would be examined by the buyer before closing is common practice among real estate brokers. A few days before closing, the buyer is required to conduct this inspection. When an inspection condition is included in the contract, the escrow company will not close the transaction until it receives a letter from the buyer approving the inspection. Inspections are required by the FHA and VA prior to the acceptance of residential loans in order to verify that the buyer would not have to perform major repairs (such as wiring, roof, and the like) during the first year of ownership of the property. There are no inspection costs for purchasers, and sellers should know that they may have to make repairs before the VA approves their loan application.

Eases not recorded in the public records, building limitations, and improvements outside the declared lot borders may be found by a title insurance company's inspector while preparing an owner policy for the property.

Residential landlords often have the authority to conduct inspections of leased properties provided proper notice has been given.

An examination of documentation or the physical features of a property.

Inspection period

A length of time during which a buyer examines the property and the documentation associated with a deal.


Someone who does a thorough inspection of the property and gives a recommendation for repairs based on the findings.

Installment contract

A contract for the purchase of land.

Installment method gain

The difference between the gain on sale of a qualifying asset for installment method reporting and the recapture of accrued depreciation or cost recovery allowances. The installment approach can only be used to record this portion of the gain. The remaining must be recognised in the transaction's taxable year.

Installment note

A promissory note that says the principal will be paid back in two or more exact amounts at different times.

Installment sale

A way to report income tax gain from the sale of real estate when the price of the sale is paid in installments (i.e., where at least one payment is to be received after the close of the taxable year in which the sale occurs). In an installment sale, you don't have to pay anything up front. Section 453 of the Internal Revenue Code no longer says that you have to pay the principal in two installments (i.e., the buyer could make a down payment of prepaid interest only, and a balloon payment of principal in a later year). If the seller helps pay for the purchase, this is called an installment sale. Some or all of the price must be paid within one or more tax years after the sale.

If certain conditions are met, taxpayers can save money on taxes by waiting to get an installment and report it as income until a later year when their other income may be lower. So, a taxpayer doesn't have to pay all of the tax on the gain in the year that it is sold. For any tax year, a gain from an installment sale is counted for principal payments received during that year in the same proportion as the gross profit from the sale to the total "contract price."

In addition to the cash received, the sales price also includes the market value of any property or notes received from the buyer, as well as any existing mortgage on the property, whether it was taken over by the buyer or not. The year of sale is the seller's tax year, and the date of sale is the date the property title is transferred or, if there is a contract for deed, the date the property is taken possession of. Note that the installment method of reporting is used automatically for qualifying sales of real estate, but the taxpayer can choose not to use it. This can be done by putting the whole gain on the taxpayer's tax return for the year. Principal payments that were agreed to before the tax changes in 1997 are taxed at the lower rates that were put in place.

Money received in the year of sale includes option money (even if it was paid in a previous year), down payment, payment of seller's debt, excess of mortgage over basis, and subsequent principal payments. Most of the time, payments in the year of sale do not include mortgages that the buyer takes on. But if the mortgage is more than what the seller paid for the property, the difference is treated as a payment in the year of sale. Note that the rule only counts money that was paid toward the purchase price of the property. Interest is always taxed because it is not considered a payment on the purchase price but rather a payment for the right to delay all or part of the purchase price payment.

Because the seller can wait to get all or most of the profit until the rest of the purchase price is paid, the seller can accept a small cash down payment, which makes the market of possible buyers bigger. This may also make it possible for the seller to ask for a higher price. Also, the seller only pays income tax on the part of each installment payment that is profit. Only the part of the principal that represents gain is taxed. The part that represents the return of capital invested (basis) is not taxed. So, the seller keeps more of each payment, which he or she can use to make more investments. Interest is, of course, taxed just like any other income.

In an installment sale, there are three steps to figure out how much tax you have to pay:

1. Figure out how much of the transaction's profit is taxable.

2. Figure out the seller's total proceeds from the sale (the money that will be paid directly to the seller). Do not include proceeds to others, like a loan assumption, in this figure ( often called the contract price)

3. Figure out how much money you will make each year (the ratio of the total taxable gain to the total "contract price," multiplied by the amount of cash received in that year)

For example, an investor sells a house for $135,000, takes a down payment of $40,500, and gives the buyer a purchase-money mortgage for $94,500, to be paid back over 20 years starting the next year. The investor makes a profit of $30,375 from the sale. So, the investor must count as a capital gain 22.5 percent of the down payment. This is the ratio between the $30,375 gain and the $135,000 contract price.

You can't use the installment sale method to sell dealer real estate or personal property.

The profits of a sale are paid in installments over a certain length of time, allowing capital gains to be spread out over several years.

Purchase of a property in which a buyer pays the purchase price in instalments over time.

Installment sales contract

A contract that specifies the terms and conditions under which a seller is committed to provide conveyance deeds to the buyer at a later date. A land contract, contract for deed, or articles of agreement are other terms for the same thing.

Installment sales method

A technique of reporting sales to the IRS in which a part of the ensuing income tax burden is delayed if any of the funds from the sale are not received during the current taxable year.


Payments made on a debt on a regular basis.

Institutional lender

A financial institution, such as a bank, insurance business, savings and loan association, or any other lending institution whose loans are governed by law. In contrast to private lenders such as pension and trust funds or credit unions, which invest their own funds, such institutions invest depositors' and customers' money in mortgages. Mortgage brokers that operate as loan correspondents for out-of-state institutional lenders frequently represent institutional lenders. Because they are lending other people's money, institutional lenders are strictly controlled by the government.

Institutional property

The same corporation owns and occupies an office building.

Institutional-grade real estate

Institutional investors, such as pension funds and international investors, prefer larger, more valuable commercial buildings worth more than $10 million. These investments are often concentrated in the 50 to 60 major metropolitan regions in the United States.


A written legal contract that establishes the parties' rights and duties.

A contract, deed, or will is a formal legal instrument. The phrase document is a broader term that refers to any paper that is used as the foundation, proof, or support for anything else. insulation Plasterboard, asbestos sheeting, compressed wood-wool, fiberboard, or other material put between inner and outer surfaces such as walls and ceilings to prevent heat loss. Air currents are broken up and dissipated by insulation.


Any substance with a high heat transmission resistance that, when installed in a building's walls, ceilings, or floors, reduces the flow rate of heat.

Non-conductive heat-resisting substance. It is applied to ceilings, floors, and walls in order to keep heat in the room.

Insulation board, rigid

Cane fibre or coarse-wood construction board in 12 and 25/32inch thickness. It's available in a variety of sizes and densities, making it versatile.

Insulating glass

There is an air space between the two panes of glass in this window or door. Also referred to as a "dual glass."

A door or window having a sealed air space between two panes of glass. Double-glazing is another name for this type of glass.

Insulation disclosure

The Federal Trade Commission has made it a rule that real estate agents, builders, and sellers of new houses must put information about the type, thickness, and R-value of the insulation in the house in the sales contract. In all listing and earnest money agreements, brokers also have to show the required facts.

Insurable interest

You have an insurable interest as soon as you sign a contract to buy a home, and it's a good idea to cover it.

A right or interest in property that would result in monetary loss to the person who has that right or interest if the property were destroyed or damaged. As a result, an insurable interest would exist not just for the property owner or lessee, but also for any mortgagee or other lien creditors involved. To recover insurance policy damages, one must be able to demonstrate an insurable interest at the moment of loss.

Property that qualifies for insurance is referred to as "insurable interest."

Insurable risk

The risk of loss from natural disasters such as fire, flood, and storm can be shifted to an insurance provider.

Insurable title

A title for which a title insurance company is willing to sell a policy.

A title that a title firm is willing to insure.

Insurable value

The monetary worth of the non-indestructible parts of a property.


In exchange for a premium paid by the insured, one party promises to pay a sum of money to the other if the latter suffers a certain loss.

Compensation for losses caused by a specific risk or danger. There are many types of insurance to cover property or liability against different risks. Insurance can be written on buildings, their contents, and their equipment. It can also be written to cover things like loss of income due to damage or something else unexpected. You can also get insurance to cover your legal responsibility to other people. When a building is covered by an insurance policy, it is covered against certain risks, such as fire, explosion, and windstorm.

Property and liability insurance policies are personal contracts between an insurer and a specific insured. So, these policies don't go with the land and can't be given to someone else without the insurer's permission. But if a loss happens, the right to the insurance money can be given to someone else.

When something is lost, the amount of the loss may be taken out of the policy. Then, you have to pay an extra premium to get the full amount of insurance back on the policy.

Most insurance policies have a clause called "pro rata liability," which says that "the insurer is not responsible for a greater portion of any loss than the amount insured against bears to the total insurance carried on the property against the peril involved, whether collectible or not." This keeps the owner from getting more money than what was actually lost if they have policies with more than one insurance company.

Public liability insurance covers the risk that a building owner takes on when the public is allowed to enter the building. A liability policy like this might pay for a person's hospital bills and doctor's bills if they were hurt in a building and said it was because the landlord didn't take care of the stairs properly, which they said was their landlord's fault. Most of the time, these policies are called owner's, landlord's, and tenant's liability insurance.

There are two ways to figure out how much the claim is worth. One is based on the damaged property's depreciated value, or actual cash value, and the other is based on the cost to replace it. If part of a building that is 30 years old gets broken, the wood and other materials are also 30 years old, so they are not as valuable as new materials. In order to figure out the actual cash value of the loss, the cost of new materials would be found and subtracted by an estimate of how much the item had lost value while it was in the building. The other way is to cover the cost of replacement. This would be the real amount a builder would charge at the time of the loss to fix the damaged property.

The rates for insurance are set by rating bureaus, which are overseen by the government. Under this system, the cost of the risk of possible damage is spread across all properties in the state. This is done by setting a premium rate for each risk based on how much damage it has caused in the past year (or several years). Underwriting bureaus change rates and keep them up-to-date based on the number of claims and the cost of fixing the damage.

If someone owned a $1 million building and thought it was in such good shape and was so well cared for and protected that it would be impossible to lose more than $100,000, they might buy a $100,000 policy. The building isn't covered enough by insurance because its policy has something called a "coinsurance clause." In the event of a loss, this clause says that the total amount of insurance on the building must equal a certain percentage of its value. If you don't have enough insurance, the insurance company will pay out less on your claim. For instance, most commercial properties include an 80 percent coinsurance clause. When a loss happens, if the building owner has the right amount of insurance, the claim is paid in full up to the amount of the policy. The point of a coinsurance clause is to make sure that the insured has the right amount of insurance and pays the right amount of premium for this coverage.

Residential insurance policies also contain a coinsurance clause. For example, a house that would cost $100,000 to rebuild today would need to be insured for $80,000 in order to meet the 80% rule (note that some policies are increasing this percentage). All losses, whether total or partial, would be covered up to the face value of $80,000. But if the house is only insured for $40,000, it is only insured for half of the minimum amount. So, if the property loss is total, the homeowner would be paid up to the full face value. If the loss is only partial, the homeowner would be paid either the actual cash value (current replacement cost minus depreciation) or half the loss, whichever is greater. The idea is that the company will only pay out the amount of the loss that is equal to the amount of insurance carried. Even though the face value of the policy is $40,000, you might only get $14,000 back if the loss was $28,000 or less.

The three most common types of homeowner's insurance are basic (HO-1), the homeowners (HO-3), and the condominium (HO-65). The HO-3 protects against many dangers, but not floods, earthquakes, or war. Flood insurance is always bought on its own.

To get hazard insurance, you must have an interest in the property that can be insured. With a contract for deed, both the seller and the buyer have an insurable interest in the property. Most contracts for deeds require the buyer to keep insurance up to a certain amount and pay the seller for any losses. If the sales contract says that the seller's insurance policy will be given to the buyer and the cost will be split, the transfer should happen at the closing. The buyer then signs a form called an assignment of policy. This form won't work until the insurance company or its authorized agent has accepted it.

Real estate brokerage firms should think about getting errors and omissions (E&O) insurance, which is similar to malpractice insurance for doctors. E&O insurance protects the broker if he or she is sued for lying about or hiding an important fact, whether on purpose or not.

A property manager is often in charge of getting the right insurance coverage for the properties they are in charge of. Some of the most common types of insurance coverage are standard fire, extended coverage and collateral fire, machinery and equipment, consequential loss, use and occupancy coverage, such as for business interruption and rental income, general liability insurance, and workers' compensation insurance.

Property owners often pay for small damages themselves instead of filing a claim with their insurance company so that their rates don't go up or they don't lose their coverage. In any tax year, taxpayers can only deduct personal casualty losses that are more than 10% of their adjusted gross income. Few taxpayers can benefit because the amount of a casualty loss not covered by an individual's insurance policy usually doesn't exceed 10 percent of the person's adjusted gross income.

Insurance clause

Requires the borrower/mortgagor to have appropriate property casualty insurance, providing the lender shared authority over the use of the funds in the event of serious damage to the property.

Insurance coverage

The quantity of funds and form of insurance carried by a property.

Insured value

A structure's insured value is its replacement cost, plus the cost of repairing or rebuilding it in the event of total destruction.

Intangible assets

Patents and copyrights are examples of nonphysical assets.

Intangible characteristics

Qualities that cannot be reduced to a numerical value but are still important to convey can do so in a more qualitative or abstract way.

Intangible property

Anything that does not have a tangible or physical existence, cannot be seen or touched, and gets any worth it may have from what it represents. Good will, for example, is intangible, as are the "sticks" in the bundle of rights.

Intelligent building

A structure with technologically advanced characteristics that assist communications, information processing, energy conservation, and tenant services.

Inter lease risk

The danger of replacing a tenant's original lease with another contract with undetermined terms and circumstances.

Inter vivos trust

A "living" trust is different from a "testamentary" trust, which is made in a person's will and doesn't take effect until after the person dies. Inter vivos transfers are made between living persons (e.g., deeds or leases).

The inter vivos trust is often used when the trustor is unwilling or too inexperienced to manage the assets or when the trustor wants to get rid of insurance proceeds, pension benefits, and the estate (pour-over trust). When the trustor dies, probate proceedings can be avoided by putting property in an inter vivos trust.


In a regression, the base value estimate assumes that all explanatory variables are set to zero.


Rent or a fee for the usage of money. The bundle of rights owned by real estate owners may also be referred to as interest.

A monetary remuneration for the usage of money.

The amount paid or earned in exchange for using money. Interest is usually expressed as an annual rate, but the parties may not always call this payment interest because it may be hidden as points or mortgage prepayment penalties. Most of the time, interest is added to a promissory note and is due at the end of each payment period (monthly, semiannually, or as required by the lender).

Most of the time, state laws set the highest interest rate that can be charged on mortgage loans. However, there are some mortgage loans that are exempt from federal rules. Usury is when a lender charges interest on a loan that is higher than the legal rate, and lenders who do this are punished. In some states, a lender who charges too much interest on a loan can still get the money back, but only at the legal interest rate. In other states, a lender who charges too much interest may lose the right to get any interest or the whole loan amount, plus the interest. Most state usury laws don't apply to loans made to corporations or by the FHA or VA.

Note that interest and real estate taxes related to the time a building was being built must be spread out over ten years. This capitalization rule still doesn't apply to housing for people with low incomes.

Interest rates are given for a period of one year. Divide this interest amount by 12 to get the amount of interest due for one month. To find the interest charge for one month quickly, multiply the loan's principal balance by the interest factor.

As long as the debt doesn't go over $1,000,000, you can deduct all of the mortgage interest you pay on your main home, second home, or vacation home when you file your taxes. A buyer can also claim a tax deduction for the discount points they pay in the year they buy a home. Interest paid on amounts borrowed against the increased value of the equity in a first or second home (called "home equity debt") cannot be deducted in full if it is more than $100,000.

Note the difference between nominal interest and effective interest. Nominal interest is the amount (percentage) of annual interest stated in the loan document. Effective interest is the amount of interest the borrower actually pays. Most of the time, the difference comes from how the debt is collected, such as by using discount points to raise the gross rate or by adding interest to the principal. See the section on Truth-in-lending laws to find out what the difference is between interest and APR.

Borrowing money from a lender comes with an additional cost.

Interest expense

Payments made in exchange for the usage of borrowed funds.

Interest in property

A legal right to own a piece of property, whether it's the whole thing (called a "fee simple interest") or just a part of it (as in a leasehold estate).

Interest rate

A fee based on a percentage of a sum of money.

The cost of borrowing money from a lender is represented by the interest rate. Prices will fluctuate and evolve over time.

Interest rate cap

The highest interest rate that can be charged on a loan with an adjustable rate at any one time during the loan's life. The interest on the loan may also have a lifetime cap.

Interest rate risk

The danger that a shift in interest rates may cause the interest collected on assets in a low-interest rate environment to be inadequate to service payments due on liabilities incurred in a higher-interest rate environment, resulting in a shortfall. The interest rate risk is the possibility of a deficit (and the resulting change in the value of a security).

The possibility that changes in the overall level of interest rates will have an impact on the pricing of all assets and investments.

Interest rate spread

In the case of house mortgage loans, the gap between the retail interest rate and the wholesale rate recognised by the banking industry.

Interest rate swap

A legally enforceable agreement between two parties to exchange periodic interest payments on a preset principal amount, known as the notional amount. In most cases, one counterparty pays a fixed rate and receives a variable rate in return, while the other counterparty pays a constant rate and receives a variable rate.

Interest-only amortizing mortgage

A mortgage loan that is interest only for a set number of years, say ten or fifteen, after which the payment is increased to completely amortize the debt over the remaining period.

Interest-only balloon mortgage

A mortgage loan that is interest-only for the duration of its term and must then be refinanced or paid off in full.

Interest-only loan

For the most part, this is a short-term deal where you pay just the interest, not the whole amount you owe.

The borrower is required to pay interest during the loan's term but not to amortize the principal, repaying it in one lump amount at the end.

Only interest is paid on a loan during the duration of the loan.

Borrowers pay just interest during the term of the loan and then repay the whole principle in one installment at loan maturity.

In this type of loan amortization, the principal is not repaid until the end of the loan's term, but interest is paid on a periodic basis until the loan is paid in full.

Interest-only mortgage loans

A mortgage loan in which the borrower only pays the interest for a set period of time, usually five to seven years, after which the borrower either pays off the loan in full, refinances, or begins to pay off the debt.

Interim development order

allows a planning authority to keep an area under control until the final scheme is gazetted.

Interim financing

Financing utilized during the building period, which will be replaced with takeout financing after development is done.

Construction loans are short-term loans made during the construction period of a building project and are sometimes referred to as construction loans. The interim loan proceeds are disbursed in stages as work on the project progresses. Permanent funding is frequently sought to "take out" the temporary loan.

Prior to permanent funding, a loan is made.

A construction loan or a bridge loan is an example of interim finance.

Interim interest

Borrower's interest on mortgage loan from day of closure to date of first payment covered by interest.

Interim use

There are a variety of uses that can be put to sites and renovated properties until they are ready for their most productive highest and greatest usage.

Interior finish

An internal framing material used to cover walls and ceilings.

Interior partitions

Non Load-bearing interior walls that surround or divide tenant space.

Interlocutory decree

A court order that won't be final until a certain date or time or until a certain thing happens. Apart from divorce decrees, which often affect how real property is split, interlocutory decrees are often used in condemnation actions.


Third-party professionals in real estate investing who utilize their skills and knowledge to invest and manage funds on behalf of customers.

Intermediate goods

Items that have been combined with other goods to become consumer products.

Intermediate theory

The legal notion that a mortgage is a lien on property until default occurs, at which point title passes to the lender.

Internal growth

A measure of the rate at which a population or the number of new households is changing as a result of natural increase (births minus deaths) and time (the ageing and maturation of that population), as young people have children and eventually start their own families.

Internal rate of return (IRR)

The most thorough explanation of historical return, covering capital contribution, income, and time. It is frequently referred to as a money-weighted return since it takes into consideration the amount invested in each period.

A financial analysis approach in which net present value is set to zero and a discount rate is found to fulfil the equality criterion; that is, the discount rate that makes present value precisely equal to the needed initial cash outlay.

The rate of interest (discount) at which the present value of cash inflows equals the present value of cash outflows; that is, the rate of discount at which the net present value equals zero.

The discounted rate that results in a net present value of zero. The internal rate of return may be thought of as the investment's rate of return.

A discount rate at which the present value of future cash flows equals the initial capital investment exactly. When deciding whether to invest in real estate or something else, a person looks at two things: the return of the original capital and the return on the original investment. Most of the time, this return on investments is shown as a yield or annual return. The internal rate of return is a good way to figure out how much an investment is worth because it can be used to compare all kinds of investments, including stocks, bonds, real estate, and business ventures. The expected cash flows from the first investment are used to figure out the internal rate of return.

Even though the IRR is being used more and more, it still has some problems. The problem with using the IRR formula is that it assumes that the investments being looked at have similar risks. Also, the projected cash flows that are used as measurements are only as good as the person who made them. This is also known as discounted cash flow.

The annual rate of return is the percentage of profit made on an invested sum each year. An investment's internal rate of return (IRR) is defined as the discount rate at which the sum of the present value of future cash flows equals the initial capital investment.

Internal rate of return (IRR) is a method for evaluating the relative merits of two investment options by comparing the difference in cash flows generated by the two options against the user's opportunity cost.

Internal rate of return on equity

The present value of each after-tax cash flow plus the after-tax equity reversion is equated with the cost of equity using a discounted cash flow approach.

Internal rate of return on total investment

A discounted cash flow method for calculating the rate at which the current value of net operational income plus the predicted net selling price equals the total cost of an investment.

Internal revenue code

The legislation that governs how and what types of income are taxed, as well as what costs may be deducted.

Internal revenue code of 1986 (IRC)

The body of statutes that codifies federal tax laws and is managed by the Internal Revenue Service (IRS), which produces its own regulations interpreting those laws.

Internal revenue code public law 591 -chapter 736.

This statute (as later altered) serves as the statutory authority for the Internal Revenue Service's income, employment, inheritance, and gift taxes. Generally referred to as the Code by tax professionals.

Internal revenue service (IRS)

Congress established the IRS to collect federal income taxes as well as to clarify and enforce tax rules and regulations.

The federal government agency in charge of collecting federal income taxes.

International council of shopping centers (ICSC)

A trade group for shopping centre owners, developers, and managers.


A global electronic network that connects government, academic, and commercial institutions to provide data, news, and opinions. Weeks before approaching a real estate licensee, over two-thirds of prospective homebuyers consult the Internet. Internet skills, including e-mail and attachments, are crucial for a real estate licensee in the twenty-first century.

Internet marketing

Use of the Internet to advertise real estate services, market properties, and give information about individual properties. While few homes are sold entirely on the Internet, it has become an important element in real estate marketing today.


When an innocent third party (stakeholder), like an escrow agent or broker, can deposit with the court property or money susceptible to adverse claims, the court can distribute it to the legitimate claimant.

When a buyer and a seller are unable to agree on the terms of a purchase agreement, it is common for the escrow account to become frozen until the matter is resolved. There are certain conditions that must be met before an escrow agent may release any money that has been placed in their custody, including the broker. Nobody can get their money back if one party refuses to cancel escrow. An interpleader action is an option if the parties are unable to reach agreement on the deposit money's distribution, and if the court accepts the money, the rightful claimant will receive it.


A method of calculating values that lie between two tabular numbers.


A situation in which two or more states are involved, resulting in federal law being applied, such as the federal securities laws.

Interstate land sales full disclosure act

A federal law passed in 1968 that regulates land sales between states by requiring real estate to be registered with the U.S. Department of Housing and Urban Development's Office of Interstate Land Sales Registration (OILSR) (HUD). It requires that all full and correct information about the property be given to potential buyers before they buy. To follow the act, the developer must make a statement of record and register the subdivision with HUD. After the registration is complete, the developer must give the buyer the property report and get a receipt for it before the purchase agreement is signed. The developer has to give potential buyers seven calendar days to think about the information in the property report. Many big subdivisions are registered with HUD because HUD rules apply if the developer sells lots through the mail or any other way that involves interstate commerce.

The intrastate exemption to the rules of the act has a small scope and is interpreted very narrowly. The sub-divider can apply for the exemption if the subdivision has fewer than 300 lots that are sold or rented to residents of the same standard metropolitan statistical area (SMSA) where the subdivision is located. There is some wiggle room, though, so that no more than 5% of sales in any given year can be made to people from another state. Some of the most common reasons why you don't have to file with HUD are:

  • Subdivisions with fewer than 100 lots. If there are fewer than 25 lots, the act doesn't apply at all, not just to the requirements for registration and disclosure.
  • Subdivisions where all the lots are at least five acres (including easements) 
  • Subdivisions where the land is improved by a building or where the seller has agreed to build a building within two years 
  • Subdivisions where all the lots are at least five acres (including easements)  Bulk sales of lots to another developer 
  • Sale to an adjacent owner 
  • Fewer than 12 sales per year 
  • Sales to a government agency 
  • Sales of cemetery lots 
  • Bulk sales of lots to another developer

HUD thinks of condo units as "lots in the sky," and the developer of a condo may have to register it with both HUD and the local regulatory agency. The risk of not following the rules is highest in larger projects where the developer builds in stages but encourages the use of shared facilities that may not be finished for more than two years (such as a golf course).

A developer doesn't have to register a condo with HUD if each unit is done before it goes on the market. In this case, "completed" means that the space is ready to be used. The developer can also avoid registration (and not have to give buyers a property report) if the unit is sold under a contract that requires the seller to finish building the development within two years of the sale, as long as construction isn't held up by things beyond the developer's control. Also, a developer doesn't have to give a potential buyer a HUD property report before they make a reservation. They only have to give it to them before they sign a contract to buy.

When a registered sub-divider sells on an installment plan, the buyer must get back any payments over 15% of the purchase price (not including interest) if the buyer doesn't pay. This rule can be skipped if the contract says that the sub-divider has to give legal title to the land within 180 days of the contract being signed.

When it comes to fraud, the three-year deadline doesn't start until the fraud is found or should have been found.

Even though the law may say that a certain sub-divider or subdivision doesn't have to be registered (like a 60-lot subdivision), it is still against the law to lie about such sales in interstate commerce. But if there are less than 25 lots, the sub-divider does not have to follow any of the rules in the act.

Interstate offering

A gift to one or more states' inhabitants.

Interval ownership

A common time-share ownership scheme in which the owner obtains title to a specific property for a specific week (or weeks) of the year.


Without a will, a decedent's property is conveyed.

A person who passes away without leaving a valid will.

Dying without a will or leaving a will in a faulty form. The property of an intestate decedent transfers to the heirs in accordance with the laws of descent in the state where such real property is located. These laws of descent differ by state and define who is entitled to the decedent's property, which must subsequently be probated in the jurisdiction. The distribution of jointly held property or life insurance proceeds is unaffected by descent laws.

The laws of descent differ widely between states: in some places, an unmarried person's inheritance belongs to the deceased's parents; in others, the decedent's parents may have to share the estate with the intestate person's lineal brothers and sisters. If a married person dies without leaving children or descendants of children, the surviving spouse may be the only heir in some states or may have to share with the decedent's parents in others. Many states permit the surviving spouse to receive a particular marital share of the estate, such as dower, courtesy, or an elective share. In states that recognize community property, a surviving spouse legally owns one-half of all community property, therefore only the decedent's half-interest transfers to his or her heirs under state laws of descent.

Intrastate exemption

Exemption from federal registration requirements for securities offered and sold only to residents of a specific state, when the issuer of the security is a resident and conducting business in that state. If a corporation is incorporated and doing business in that state, and if the partnership's assets and activities are likewise located in that state, the exemption applies. The Securities Act of 1933 and the Securities Exchange Act of 1934 nonetheless apply to intrastate offerings, even if they are excluded from the SEC's cumbersome registration requirements. Interstate exceptions are interpreted and enforced very narrowly. Non-residents can no longer benefit from the exemption if the issuer makes a single sale or resale, or even an offer, to a non-resident.

Intrastate offering

A security issuance issued for sale primarily inside one state by an issuer who is a resident of that state or a corporation formed and doing business there. A suitable intrastate offering is exempt from federal registration requirements.

An offering in which all of the investors live in the same state as the property.

Intrinsic value

This is an appraisal term that means the result of a person's choices and preferences for a certain area based on its features and amenities. For example, most people would say that a piece of property in a well-kept suburb near a shopping centre is worth more than a similar piece of property near a sewage treatment plant. In general, the more money a property can bring in when it's sold depends on how much it's worth on its own. Most land speculation is based on this idea of what the land is worth now versus what it will be worth in the future. What was farmland a few years ago might now be a booming town, and a smart investor knows how to find, buy, and sell these kinds of "speculative" properties at the best times.


Property that is being held for the purpose of sale or usage.

1. A list of items with descriptions. Many real estate agents suggest that their clients add an inventory of the things that will be included in the sale of a house or condo to the sales contract. This makes it less likely that there will be confusion about which items in the seller's home will be given to the buyer. Of course, an inventory should be part of the sale of a property that brings in money, like a building with furnished apartments, and the agent should check the inventory.

2. A list of the goods that are in stock and ready to be sold in the normal course of business. Stock-goods sales profits are taxed the same way as other income.

The quantity available of a particular good, or a record of such a thing.

Inverse condemnation

A landowner's claim to force a government to use eminent domain on the grounds that regulation has essentially seized the whole worth of a property.

A just compensation action launched by a person whose property has been effectively taken, significantly interfered with, or taken without just recompense. For example, if a governmental authority announces that it will condemn an owner's property but then takes an unreasonable amount of time to take the property, the owner can file a lawsuit to demand a condemnation and payment for the taking. If the noise of low-flying government aircraft interferes with the owner's use of the land, inverse condemnation, or a taking of property for which compensation must be paid, may occur. Another case in point is when some public works are carried out, causing damage to a private owner, but no condemnation action is taken by a public entity. Inverse condemnations are so-called because they are initiated by an owner seeking compensation from the condemning body, and the payment is for land that was not explicitly condemned.

Courts have ruled that zoning actions that simply reduce the market value of property do not constitute a compensable action on an inverse condemnation theory as long as a reasonably viable economic use exists. Before there has been an actual take or physical interference with the subject property, an inverse condemnation claim is not available.

Inverse condemnation is the inverse of eminent domain and happens when a public institution indirectly "condemns" private property by acting (e.g., through a restricted use rule such as downzoning) or neglecting to act when it should have, resulting in property loss or damage. The taking is accomplished by actions rather than legal action. It makes no difference whether the act or omission to act was negligent.


Putting off present needs in favour of future wants.


Commitment of money or other assets with the hope of gaining financial reward.

Any action that entails incurring considerable current expenditures in exchange for the right to gain future advantages. An investment of money or anything of value in exchange for uncertain income or profit.

Investment contract

A contract, transaction, or scheme in which a person invests money in a shared venture and is lead to believe that profits will come purely from the promoter's or a third party's efforts.

The sale of real estate through investment contracts is considered the sale of a security, necessitating compliance with federal and state securities regulations.

Investment grade

Investments rated AAA, AA, A, and BBB that are appropriate for regulated institutional investors.

Investment interest

How much interest was paid to buy or keep an investment property. This doesn't include interest paid on a personal home or an interest from a passive activity. Investment property includes anything that brings in money, like interest, dividends, annuities, or royalties. It also includes any trade or business in which the taxpayer doesn't participate much, as long as it isn't considered a passive activity. Investment interest can be deducted up to the amount of income from the investment. Any extra interest from investments is carried over to the next year.

Investment interest limitation

Internal Revenue Code provision that limits the amount of investment interest that may be deducted in a single taxable year on loans used to support investments.

Investment life cycle

The length of time that a property has been owned.

Investment property

As defined by the Internal Revenue Code, an asset is one that is held primarily for the purpose of obtaining an investment return, particularly capital appreciation, as opposed to one that is held for use in one's trade or company. Real estate investment opportunities include raw land and built lots.

Property purchased for the purpose of generating current income and capital appreciation.

Rather than a primary dwelling, a piece of property that generates revenue or serves as an investment.

Investment return

the monthly (or annual) rate of return on an investment generated by rental and/or selling.

Investment risk

The likelihood that future cash flows or nonmonetary expenses and benefits will deviate from projected values.

Investment tax credit

A credit against income taxes generated as a result of investing in eligible assets.

A tax break depending on the cost and useful life of specific assets acquired.

Investment value

The current value of the stock position and the present value of the debt position added together. The present value of a stock holding is computed after taxes and takes into account the tax repercussions for a given investment.

The worth of a property to a certain investor, depending on his or her personal criteria, discount rate, expectations, and so on.

Value to a particular investor is determined by factors such as the investor's needs, tax bracket, and financing options.

Investment value of equity

After-tax cash flow and after-tax equity reversion are valued using a discounted cash flow approach.

Investment yield

An investment's growth in terms of money invested. Usually expressed as a percentage increase or return.

Investment-grade property

Large, relatively new, and completely leased commercial buildings in major metropolitan centres, often worth more than $10 million, and sought by institutional investors such as pension funds and international investors.


Any individual or company that invests in real estate to utilize in a trade or business or to generate money.

A person or a business that invests in a cash transaction.

Investor note financing

Investor promissory notes are financed.

Involuntary alienation

When a property's title passes to the state because the owner dies without any heirs, the state takes ownership of the property as a result of a lien foreclosure auction, adverse possession, a bankruptcy petition, or a condemnation under the authority of eminent domain.

Involuntary conversion

A tax word that refers to the loss of property due to demolition or condemnation. A conversion of this type is deemed a "sale" and is taxable unless the revenues of the condemnation award or insurance payments are reinvested in similar property. If a property is condemned and the owner replaces it, the basis in the replacement property is the same as the basis in the condemned property, except that it is increased by any debt assumed above the amount of the condemnation award, and gain is recognised to the extent that the award exceeds the price paid for the replacement property. Section 1033 of the Internal Revenue Code requires that replacement property for commercial or investment property be purchased within two to four years of the end of the tax year in which there was a threat of condemnation, depending on the kind of property.

Involuntary lien

A statutory lien, such as a real estate tax lien, judgment lien, or mechanic's lien.

A lien that is imposed on property without the owner's consent.

Inwood tables

Before calculators and computers were common, appraisers often used a set of interest tables to figure out the present value of an annuity for a number of years at different interest rates. One of the many ways Inwood tables can be used is to figure out how much a leasehold interest is worth when the income stream (cash flow) stays the same. They are also called the "Inwood coefficients."

The idea behind the system is that the present value of an annuity is not the sum of equal annual payments that will be made in the future. The annuity is only worth the amount that, if deposited today at a fixed rate of interest compounded annually, would allow one annual payment to be withdrawn at the end of the year.


The Investment Property Databank is a database of investment properties.

Ironclad agreement

A deal that can't be broken by the people who made it.

IRR of the differential

The rate of return calculated by subtracting the cash flows of one investment from those of another.


that which is irreversible

Irrevocable consent

A contract that can't be broken or changed. Most state licensing laws require a broker who doesn't live in the state to sign a document saying that he or she will be bound by the outcome of any lawsuits brought against the broker.


A sprinkler system for the lawn.

Irrigation districts

Quasi-political districts established under special state statutes to supply water services to district property owners and given the authority to levy fees to fund district operations.


The Internal Revenue Service of the United States of America.

Isopleth map

A map made up of lines (isolines) that link locations with the same attribute value.


A party who has given permission for securities to be created and sold to investors.

Itemized deductions

Taxpayer expenditures mentioned in Internal Revenue Code Sections 161 through 1 95 that can be deducted from adjusted income to arrive at taxable income.

Glossary Index

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