RESOURCES - TENANTS-IN-COMMON
In the realm of real estate investment, the Tenants-in-Common (TIC) structure is a viable option for holding title to a property with multiple parties while still maintaining qualification for a 1031 exchange. The 1031 TIC structure provides the opportunity for numerous investors to partake in the tax deferral benefits of direct property investment as tenants-in-common. Unlike a DST, in which each co-owner holds a portion of the DST that, in turn, owns the properties, the TIC structure ensures that each investor has an individual, non-severable interest in the property, thus enabling them to qualify for tax deferral treatment.
It is important to note that the IRS has established specific guidelines that TICs must meet to be eligible for 1031 Exchanges. These requirements include:
Limited to 35 co-owners.
Material decisions must receive unanimous approval by the co-owners.
Co-owners must share (by ownership percentage) all income, expenses, debt service, and distributions.
Parties not on the title (e.g., Sponsor) may not share in these amounts.
Sponsors are compensated for orchestrating the transaction, but may not be paid based on profits or investor returns.
Investing in Tenants-in-Common (TICs) can offer a reliable source of long-term recurring income. The income generated from a TIC is deposited directly into an investor’s designated account, typically each month or quarter. Additionally, TICs offer a tax-advantaged investment opportunity as investors can deduct their proportionate share of mortgage interest and depreciation.
One of the key advantages of investing in a TIC is that the investment is “packaged” by a Manager who is responsible for all property management, asset management, and property operations. Managers also provide periodic investor reports on the performance of the underlying TIC properties. As a TIC investor, you are generally shielded from personal liability beyond your investment.
TICs offer investors the opportunity to purchase interests in institutional quality properties that may otherwise be out of reach based on their 1031 Exchange funds. By pooling their equity with other co-owners, investors can own a portion of a property that may have otherwise been an unattainable investment. TIC investments can be purchased in $100,000 – $500,000 increments, which allows investors to perfectly size their investment to the amount of proceeds they have to exchange. Additionally, TICs provide access to a variety of potential investment options across the US, giving investors the flexibility to diversify their 1031 investment into multiple TICs.
Despite its benefits, the TIC structure has its drawbacks. Investors are limited to 35 investors, which effectively limits the amount of equity that can be raised and the size of the property that can be acquired.
In conclusion, TIC investments offer many benefits to investors, including long-term recurring income, tax advantages, simplified investment processes, and access to institutional quality properties. With the ability to diversify investment options and size investments perfectly, TICs can be a valuable addition to any investor’s portfolio.
CONSIDERING A 1031 EXCHANGE?
CONSIDERING A
1031 EXCHANGE?
Discover the power of streamlined 1031 exchanges by joining our marketplace today! Enjoy seamless transactions, expert guidance, and access to diverse selection of top-performing 1031 exchange replacement offerings tailored to your unique needs.
At 1031LIVE, we understand the importance of making informed investment decisions, and we encourage you to contact us prior to taking any steps regarding your 1031 exchange, as our extensive network of resources, including qualified intermediaries, enables us to provide you with the most up-to-date and reliable information available.
Please submit your 1031 exchange requirements to be matched with our current replacement offerings, including off-market, pre-market, and exclusive opportunities.
Our mission is to empower individuals to create and maintain generational wealth. Join us now and embark on a smarter investing journey!
Discover the power of streamlined 1031 exchanges by joining our marketplace today! Enjoy seamless transactions, expert guidance, and access to diverse selection of top-performing 1031 exchange replacement offerings tailored to your unique needs.
At 1031LIVE, we understand the importance of making informed investment decisions, and we encourage you to contact us prior to taking any steps regarding your 1031 exchange, as our extensive network of resources, including qualified intermediaries, enables us to provide you with the most up-to-date and reliable information available.
Please submit your 1031 exchange requirements to be matched with our current replacement offerings,
including off-market, pre-market, and exclusive opportunities.
Our mission is to empower individuals to create and maintain generational wealth. Join us now and embark on a smarter investing journey!