TIC (Tenancy In Common) is an agreement of ownership between two or more investors that own a single property. Tenancy in common provides unshared ownership of property for its investors. These are the arrangements under which investment can be made even for a small amount of money.
Under Tenants In Common, the ownership shares are not required to be equal, and one of the most important benefits of TIC is that ownership can be inherited. TIC investment can be made for the projects like apartment houses, shopping complexes, office buildings, etc. TIC investments are almost similar to DST, but it comes with one drawback: the numbers of investors are limited to 35 in TIC, whereas DSTs don’t have any limitations.
Every Co-owner of the property receives an individual deed at closing his unshared percentage interest in the entire property. Even if having a small portion of the property, a TIC owner has the same rights and benefits as a single owner of the property. In TIC arrangement, the first and most important step is the involvement of real estate companies. There are many real estate firms that help investors in obtaining shares in TIC properties. And these real estate companies play a very vital role in the closing of the exchange.
TIC investments are the best low investment opportunities for those who are seeking diversification. One more reason for its popularity among investors, especially among 1031 exchangers, is the flexibility in its structure and ease in purchasing TIC properties.
Let’s take an example.
Suppose the investor receives $300,000 on a sale of property they own. Now the investor is planning to build a shopping complex, but from this small amount of money from the sale, the investor will not be able to purchase a high-quality property.
However, by investing in TIC exchange, the investor can use his proceeds, i.e., $300,000, easily in purchasing 10% interest in a high-rise shopping complex worth $3 million.
The benefits of ‘Tenancy in common’ investment aren’t limited to this only. While exchanging a TIC property for another, investors can defer capital gains taxes on the exchange. Before proceeding with an exchange, the real estate investors must know what the 1031 exchange is? 1031 exchange allows the investors to reinvest the proceeds of the relinquished property to buy the replacement property. One of the most important points to be kept in investors’ minds is that properties involved in 1031 exchange must be held for productive use in a trade or business or investment purposes. The 1031 exchange had made it possible for the real estate investors to enjoy the benefit of tax deferment.
1031 exchange allows the investor to swap like-kind properties. The real estate companies open a special type of account known as an escrow account for this exchange.
For consultation and assistance regarding the 1031 exchange, you can call – 888-876-6005 or email us at info@1031sponsors.com.