Tenants In Common Agreements

Written by Linda Alexander
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Section 1031 exchanges help you avoid immediate taxes on any gains in business or income real estate. Yet there are a number of problems associated with them. The timing requirements, for example, are very strict. You have to identify properties within 45 days of selling and close on the new properties within 180 days. Also, many 1031 investors do not want to be actively involved in property management. Sometimes, they want to travel or retire. They might be looking for something passive.

Finding replacement properties for the exact amount you have to invest may also be difficult. The choices might be limited, unless you seek the help of exchange specialists who locate properties. If you can't find a replacement property, you might have to settle for undesirable financial terms just to invest in a qualified property.

One Solution to Many Problems

Over the last few years, tenants in common investments have become a popular way to solve many of these problems. With TIC agreements, multiple owners of a property have an equal, undivided ownership interest in the TIC property. As long as the agreements are set up properly, TIC properties can be exchanged under IRC Section 1031, just like any other real estate.

Real estate companies that offer TIC investments have been cropping up all over. They all help you defer paying capital gains taxes from the sale of your investment property which has appreciated in value. Consult a qualified real estate or tax attorney if you have any questions before you enter into any agreements. TIC agreements might be right for you if you are looking to purchase commercial investment property with a low minimum investment or if you seek more passive income.

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