1031
What is a tenants-in-common? PDF Print E-mail

Tenants-in-common (TIC) ownership is a popular choice among real estate investors seeking replacement property for their IRC section 1031 tax deferred exchange.

A TIC is a co-ownership structure under which an investor may own an undivided fractional interest in an entire property and participate in a proportionate share of the net income, tax shelters, and growth.

A TIC owner receives a separate deed and title insurance for his or her percentage interest in the property and the investor has all the same rights and privileges as a single (fee simple) owner.

TIC properties are often available as "turn key" prepackaged investments with management and financing in place and therefore offer superior efficiencies in the identification, acquisition, financing, closing, and operating stages of real estate ownership. These efficiencies are especially helpful and often critical given the strict time restrictions confronting an investor if he or she is funding the investment through an IRC section 1031 tax deferred exchange.

Simply put a TIC allows the investor to access large investment grade properties with financially secure, often publicly traded, credit-worthy tenants under long-term triple net leases and professional management. This allows for a truly passive investment with more secure annual cash-flow and significant appreciation potential. Formerly, these types of investment were only accessible to the traditional investor through REIT’s, limited partnerships and investment funds all without the tremendous advantage of tax deferral via a section 1031 exchange into and out of the investment.

In addition, with minimum investment requirements as low as $100,000 the investor can now hedge risk by diversifying his or her real estate portfolio to include multiple properties in different geographic locations throughout the United States, as well as, in different sectors such as office buildings, retail shopping centers, residential apartment complexes, and industrial parks.

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