1031 Tenants In Common

What is Tenants in Common?

Tenants in Common (TIC) enables an owner of investment real estate to sell  their property and join forces with similar investors, to jointly purchase a larger replacement property.  Being an owner in a TIC property means you hold title to  an undivided fractional interest in a larger, high quality institutional grade property.

1031 TIC Exchange Program

At R. L. Johnson Investments, we understand the many complexities involved in the 1031 Exchange process.  We know that finding a replacement property within 45 days can be a daunting task.  Let our experienced help simplify the process and ensure that critical IRS deadlines are met.  Whether you're considering selling the family farm, an apartment complex or any other investment real estate, let us help.  Call us at (513) 367-1031.  

Benefits of the TIC program include:

• Tax deferral of capital gains from the sale of investment real estate
• A choice of quality replacement properties 
• Experienced property managers relieve the burden of active real estate ownership 
• Creditworthy tenants
• Diversify your real estate portfolio by geography and property type 
• Most properties offer triple net leases
• Multigenerational tax benefits--after a lifetime of tax deferral through exchanging, an investor may leave the investment property to chosen heirs who will receive stepped-up basis for the bequeathed property; heirs won't be taxed if property is sold at the stepped-up basis based on current tax laws  

Risks of a TIC program include:

• Purchasers will be required to rely on a third party manager to operate the property purchased, and will have little control over the compensation paid to the third party manager.  The prices for properties being sold in 1031/TIC programs often are not the result of arms length negotiations.
• The sponsors and manager of the real estate purchased will often have conflicts of interest that can adversely affect an investor.
• TIC interests are generally difficult to sell and are therefore illiquid.
• Cash flow generated from TIC investments is not guaranteed.  Tenants can default, which can cut off cash flow to investors.
• Use of leverage funds in TIC programs may significantly increase the loss.
• There are substantial cost associated with a 1031 investment and can offset the benefits of an exchange.
• There are significant tax risks from acquiring property as replacement property in a Section 1031 tax deferred exchange and changes in IRS 1031 tax code could impact future 1031/TIC exchanges.

The 1031 Exchange Process

1. Exchanger sells their property and chooses a qualified intermediary to hold proceeds to be used for a replacement property.  If you need help finding an intermediary let us know.  We work with the best in the industry.  *Relinquished property must be considered "like-kind" to the replacement property.
2. The exchanger must identify the potential replacement property within the first 45 days after the close of their relinquished property.
3. Exchanger must acquire the replacement property/properties within 180 days of the close of their relinquished property.

Please review common 1031 Tenants In Common questions for any additional information and the different types of 1031 properties.

*The material contained neither constitutes an offer to sell or an offer to buy real estate or securities.  Such offers are made only by the sponsor's private placement memorandum which is always controlling.  There are natural risks associated with the ownership of real estate.  **This type of investment is highly speculative.  There are significant risks for acquiring interests as replacement property in a 1031 exchange.  1031 exchanges are for accredited investors only.

• An accredited investor is an individual with a net worth, or joint net worth with their spouse that exceeds $1 million at the time of the purchase; or an individual with income exceeding $200,000 in the last two years or joint income with a spouse exceeding $300,000 for those years and a reasonable expectation of the same in the current year; or a trust with assets in excess of $5 million, not formed to acquire the securities offered, whose purchases a sophisticated person makes.

**R.L. Johnson Investments does not provide legal or tax advice and purchasers should contact their attorneys and/or accountants for situations that may have legal and /or tax implications.