What is TIC (Tenants in Common) and how does it work with 1031?
A Tenants in Common investment is a form of real estate ownership where multiple owners come together to own an undivided interest in a large, institutional-grade property (also referred to as "fractional interest") and thereby satisfy the exchange requirements for "like-kind" property. Each co-owner would have the same rights as a single owner and would hold the proportionate share of appreciate value, income, expenses and tax shelter.
In March 2002, the IRS issued Revenue Procedure 2002-22, which outlines the conditions under which the IRS will consider a request for a ruling that a Tenants in Common interest in rental real estate is not an interest in a partnership. These conditions provide guidence for TIC sponsoring companies who wish to seek private letter rulings. Keep in mind that all potential exchangers should consult with their accountant or tax attorney to see if a 1031 TIC exchange suits their particular situation.
Still have questions?