What is a 1031 exchange?

A 1031 exchange makes it possible for investors to sell and buy property of like kind while deferring tax consequences. This transaction is authorized by section 1031 of the IRS code and offers investors a reliable strategy for the protection of their real estate assets. A successful 1031 exchange allows the investor to reinvest 100% of the equity from the sale of a property into the purchase of a preferred replacement property without recognizing any gain. This type of property sale and reinvestment can either be done through a simultaneous or delayed 1031 exchange. In most cases a 1031 exchange is done as three-party delayed exchange also known as a "Starker Exchange" in which an intermediary ensures a reciprocal transfer of the properties and provides a "safe harbor" against the actual receipt of exchange funds.

What are the advantages of a 1031 exchange?

1031 exchanges provide real estate owners with a range of opportunities to meet personal investment objectives including increased leverage, improved cash flow, diversification, reduction of management obligations, geographic relocation and/or consolidation. The tax dollars saved by an exchange may be maximized to increase an investor's overall net worth. Ultimately, the exchange process allows investors to reorganize and improve their real estate portfolios to best suit their unique interests and needs.

What is Tenant-in-Common ownership?

Tenant-in-Common Ownership, also known as TIC ownership, is rapidly becoming the most popular choice among real estate exchangers seeking ideal replacement properties. While it is often difficult to locate a property that has the right purchase price, debt ratio and closing schedule within the 45-day time limit, TIC properties are flexible enough to meet almost any 1031 exchanger's needs. A TIC interest represents co-ownership between two or more investors and is especially suited to investors involved in the 1031 exchange process because the properties can be identified and closed in a timely manner thanks to pre-arranged financing.

What are the advantages of TIC ownership?

Since TIC investors receive separate deeds to undivided interests, they are able to own fractional interests in potentially larger, higher valued and better located properties than they could own independently. The resulting advantages may include increased net cash flow, tax write-offs and appreciation without the headaches and time commitments of real estate management. With a TIC 1031 exchange you can trade your management-intensive property for a triple net lease or institutional-quality property that will appreciate and generate steady income on its own. Through your management contract, a manager can be retained to deal with the hassles of tenants, maintenance and upkeep while you enjoy your free time!

TIC is NOT an investment entity

TIC owners have the same bundle of rights as if they solely owned the reinvestment property outright.

TIC ownership is a direct, undivided ownership interest in an investment property. Simply one co-investor with other exchange investors is a Tenant in Common, with each exchange investor having individual and undivided rights in the whole property. Each TIC exchange investor is entitled to his/her percentage interest to possession of and the profits of the entire property subject to the same rights of the other TIC exchange investors