Don’t pay a dime of tax that you really don’t need to pay! Keep that money for you and your family, not the government!
Many property owners know that, a 1031 exchange allows them to sell one property and buy another, without paying tax. However, fewer of them know that this can be accomplished through, the tenant in common or “TIC” structure, assuming their net worth exceeds $1,000,000 as an individual or $5,000,000 as a trust.
TIC investments have become an option for property owners looking to conduct a 1031 Tax Deferred Exchange. TIC investments enable the sophisticated investor to exchange out of appreciated real estate and into, institutional properties nationwide.
What is a TIC? A Tenant-In-Common (TIC) investment is a co-ownership of real estate by two or more investors, also known as fractional ownership. Each co-owner receives an individual deed for his or her undivided percentage interest in the entire property while enjoying the same rights as a single owner. The owners share “pro rata” in the income, tax benefits, risks, and appreciation or depreciation of the property. Tenant-In-Common investment properties typically employ professional property management guided by an agreement.
The required investment amount varies depending on the property. In general, TIC minimum investments range from $150,000 to over $15,000,000. The TIC investment holding periods may vary from five years or less to as long as twenty or more years.
Why do a “1031 TIC” transaction? Because you seek the tax benefits of a 1031 but are tired of managing a property, looking to downsize, or wish to diversify by asset, class, or geographic location.
Who can help me with this? Doing a “1031 TIC” transaction requires both a qualified intermediary and a NASD licensed professional. The intermediary will perform the closing, prepare all necessary documents, and then hold and disburse the funds. They will also help you follow the general rules of a 1031 exchange; such as 45 days to select a replacement property and 180 days to close, subsequent to the closing date of your sale. To facilitate the exchange the NASD licensed professional will help you with the required documentation and also locate various properties that meet you’re investment goals.
Each property is different, so be sure to put together a team that can review your properties with a variety of reports to help you make educated investment decisions. Along with 1031 exchange experts, your team should also include a qualified attorney and accountant to assist you with your due diligence in this re-investment strategy.
Its your money. You work hard to make it, and a 1031 TIC Exchange can help you keep it.
Steven B. Shaiman, CPA is a registered representative of Calton & Associates a qualified 1031 TIC Exchange broker dealer contracted to sell TIC investments. You can contact Steven via email, stevenbshaiman.cpa@comcast.net, through the NJ Apartments message board or by calling 973-535-5740. Mention GardenStateApartments.com to get a free consultation!!
