1031/Tenants-in-Common (TIC) Information

What is a 1031 exchange?

Under section 1031 of the Internal Revenue Code, a real property owner can sell his property and then reinvest the proceeds in ownership of like-kind property and defer the capital gains taxes. To qualify as a like-kind exchange, property exchanges must be done in accordance with the rules set forth in the tax code and in the treasury regulations. The 1031 exchange can offer significant tax advantages to real estate buyers. Often overlooked, a 1031 exchange is considered one of the best-kept secrets in the Internal Revenue Code.

What is Tenants-in-Common (TIC)?

A TIC is a form of real estate asset ownership in which two or more persons have an undivided, fractional interest in the asset, where ownership shares are not required to be equal, and where ownership interests can be inherited. Each co-owner receives an individual deed at closing for his or her undivided percentage interest in the entire property. Through TIC ownership, the average person is able to enjoy ownership in an institutional-type property with a minimum investment. What are the benefits of TIC (Tenants-in-Common) ownership?

The TIC structure has various features that make it attractive to the real estate buyer.

Did you know that you can exchange a 1031 into a TIC type property? You have to have a tax preparer set this up so that it is done with in the laws of 1031 exchange. The other benifit is it is quicker to do than a regular property purchase. This helps you, when you are running out of time and will pay a tax penalty if you don't close with-in the window opportunity allowed of a 1031.