Tenant-In-Common Investments

Investors looking for replacement property which could potentially provide consistent income and appreciation — without the headaches associated with property management – then a Tenant-in-Common (TIC) investment may be a viable replacement option for 1031 exchange. Although Tenant-in-Common ownership has been available for quite some time, it has become increasingly popular since the IRS recognized TIC investments as valid replacement properties in 2002. For real estate investors seeking high quality, professionally managed replacement properties, this may be the answer.

A Tenant-in-Common investment is an ownership structure in which multiple investors each own a deeded interest in a property. TIC owners share a portion of the net income, depreciation and interest deductions, and the potential appreciation of the property. Owners receive a separate deed and title insurance for the percentage ownership interest in the property and have many of the same rights as a single owner. Because TIC interests are deeded, direct ownership interests, and not partnerships, they qualify as “like-kind” property for the purpose of completing a tax-deferred exchange.

TIC properties enable the average real estate investor to participate in the ownership of institutional quality properties ranging in value from $10 million to over $100 million. These are professionally managed properties, such as Class A office, anchored retail, and multi-unit apartment complexes, which generally provide appreciation potential. The potential for predictability and stability of TIC properties may be derived from some or all of the following characteristics: superior location, construction, and amenities; a larger number of higher quality tenants; and long-term leases. Whenever possible, TIC investors can reduce risk through diversification by investing in multiple TIC properties.

1031 Investment Services provides a ready inventory of TIC properties offered by over 60 nationally recognized real estate investment companies (sponsors) with experienced management teams and proven track records. 1031 Investment Services is an independent consulting firm and can work with any sponsor that meets our stringent requirements and our broker-dealer’s review. Our representatives work for and have a fiduciary responsibility to the investor, and so our first priority is always to our clients.

Tenant-In-Common Exchanges Have These Benefits:

• Tax deferral of capital gains and depreciation recapture
• Eliminate the burden of property management
• Potential cash flow ranging from 6% to 7.5% (cash on cash yield)
• Access to a wide variety of higher quality properties
• Potentially reduced risk through diversification by property type, geographic location, tenants,    and lease expirations
• Simplicity and certainty of closing can make it easier to complete your exchange into a    property that suits your needs
• Improved tax benefits via depreciation and interest deductions
• Estate planning benefits
• Flexible investment amounts with minimums as low as $100,000

Tenant-In-Common Exchanges Also Have These Risks:

• An investment in a TIC is an investment in real estate and as such should not be    considered a liquid investment.
• Cost to acquire a TIC property may be higher than sole ownership given the expense of    making the property available to multiple co-owners, which may outweigh the benefits of tax    deferral.
• Tax qualifications of the underlying TIC property as a bona fide 1031 replacement property    is set forth in in Rev. Proc. 2002-22, and investors should either consult with their own tax    counsel or carefully consider the conclusions of the tax opinion provided.