1031 Exchange & TIC Properties

1030 tax-deferred exchange

Internal Revenue Code §1031, tax deferred treatment of capital gains, is one of the best real estate investor vehicles for preserving and building wealth: This provision of the Internal Revenue Code allows property owners to exchange their property for other like-kind property without recognition of capital gains. It makes possible to transfer the financial gain that is realized from the sale of a property into another property without federal capital gains tax at the time of the sale.

Why Exchange?
Taxes:
Federal- 15-25% (currently 15% minimum capital gains)
State- 1 to 9% (varies from state to state)

Leverage:
By having more money to put down, a bigger property or multiple properties can be acquired.

Sell Later:
By exchanging today, it is possible to sell in the future when there is a more favorable capital gains rate.

Time Value of Money:
A dollar today is worth more than a dollar tomorrow. Instead of paying $10,000 in taxes today, pay it in the future when $10,000 is worth less. Better yet, avoid paying it at all.

TIC Properties

What are TICs? TIC (Tenants In Common) ownership is an undivided fractional interest in an entire real estate property. A TIC owner shares in their percentage of rental income, tax deferral and potential appreciation. A TIC strategy allows the average investor to own institutional grade property. It is important to understand that TIC owners are not partners, but own a deeded undivided fractional interest in a large commercial property. The owner receives their individual deed at closing and has the same rights that a sole owner of the entire property would have. It’s a sleep at night investment

Like-Kind Property

All TIC properties presented by Dave1031 and KETTLEY1031 qualify as like-kind property. This makes a TIC property a prudent investment consideration for small tax-deferred exchanges and for any substantial residual funds from a larger exchange.

Low Minimum Investment

Rather than a $1 million investment, an owner can participate in deeded ownership with a minimum investment as low as $150,000. This allows investors greater diversification and flexibility by allowing ownership in differing geographic areas and property types.

Simplicity and Speed

TICs usually are set up with a non-recourse whole property loan, assumable without assumption fees. The due diligence information provided for the whole property purchase is provided for TIC owners and property site visits are encouraged. TIC purchases can be completed in just a few days making them ideal for 1031 exchanges.

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