Tenancy-In-Common (TIC) is a real estate ownership structure that has regained popularity in recent years due to the new IRS rules and regulations governing transactions such as 1031 Tax Deferred Exchanges. Additionally it is a popular form of ownership for real estate buyers who wish to acquire interest in properties previously affordable only to large or institutional investors.
Tenancy-In-Common (TIC) is also known as "fractional ownership".
Through this co-ownership structure you can acquire an undivided fractional ownership interest in real estate and enjoy a proportional share of the net income, tax shelters, and appreciation. You also receive a separate deed for your undivided percentage interest in the property and thereby have direct ownership rights. For example, say you were interested in a
TIC ownership position in a multi-tenant office building. You would share in the ownership of the entire property, not a specific office suite. The same would be true for a multi-family complex, retail shopping center or single tenant properties.
Many buying opportunities involve long term net leased properties that have only a single tenant such as: CVS Drug, Goodyear Tire or Walgreen's. These properties are very attractive to buyers due to the fact that the Tenant is generally responsible for all repairs, replacements and reserves. In many of these cases the cost of property management can also be eliminated or minimized. As a result, the buyer can receive relatively stable and predictable cash flow payments for years to come with minimal or no management involvement.
Other benefits of TIC ownership investing:
- Flexibility in the amount of down payment capital requirement.
- Can accommodate the all cash buyer or the buyer that needs to replace debt.
- Closings are in a timely manner to accommodate the 1031 exchange rules.
- Excellent cash flow returns with conservative debt/equity ratios.
- Can qualify to be owned by your Retirement Plan (subject to your plan restrictions)
In 2002, the Internal Revenue Service issued new guidelines concerning 1031 tax-deferred exchanges relating to
TIC ownership structures.
Southeast Capital Associates, LLC in conjunction with its legal counsel has made every effort to assure all their real estate opportunity offerings comply with IRS Revenue Procedure 2002-22. It is recommended you seek legal and financial counsel prior to purchasing any real estate interests.
