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$650 covers you for one relinquished property and one replacement property.

An additional $175 will be charged for each replacement property purchased afterwards.

There's a $30 wire fee for outgoing wires.

That's it.

AND we pay interest on the funds while we
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Tenant-in-common Investment - TIC Properties


Using Tenancy-in-Common Interests

By Cecily A. Drucker, Esq.

Since the issuance of IRS Revenue Procedure 2002-22, the use of tenant-in-common interest as a vehicle for tax-deferred, 1031 exchange has grown in popularity. This procedure now makes it possible for co-owners of investment TIC Investment to separately exchange their tenant-in-common (TIC) interests investment properties.

In general, TIC co-owners of rental real estate cannot individually consummate an exchange since for tax purposes these co-owners are treated as partners and the partnership is the "taxpayer" that owns the rental real estate. Only when all the TIC owners sell their TIC interests collectively to one buyer will the owners qualify for a tax-deferred exchange. In Rev. Proc. 2002-22, however, the IRS has provided an opportunity for TIC co-owners of rental real estate who structure their co-ownership in accordance with the requirements of the Rev. Proc. to obtain an IRS ruling that they are not a tax partnership.

If co-owners obtain such a ruling, each TIC owner will be able to both acquire and dispose of their respective TIC interests in rental real estate through a tax-deferred 1031 exchange. There are basically 15 conditions that the Rev. Proc imposes as a prerequisite to obtaining a favorable ruling. Here are three of the most critical to TIC owners.

Owners must be tenants in common under the local law of the jurisdiction where the property is located.

Due to the fact that many lenders now require that a real estate borrower be a special-purpose entity (SPE), the ownership vehicle of choice for each separate TIC co-owner in a TIC investment is a single-asset, single member limited liability company (SASMLLC).
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This vehicle provides the benefit of limited liability to the company's single "member", whether an individual, a partnership, a corporation, or the trustee of a trust, and also allows the member to be treated (for federal income tax purposes) as the owner of the asset held in the name of the SASMLLC (so long as there is only one "member" of the SASMLLC). As a result, all federal tax attributes— including the use of section 1031 exchanges—flow directly to the single "member" of the SASMLLC.

Owners may undertake only certain real estate activities.

TIC owners (either directly through an agent or through the promoter of the investment) may engage only in "customary activities" performed in connection with owning rental real estate. Customary activities include rent collection, maintenance, and leasing. This requirement would seem to prevent a Rev. Proc.-compliant TIC owner from developing or rehabilitating a property. One proposed way to satisfy the requirement has been for TIC owners to lease their property to another legal entity on a triple-net lease. The lessee has to be unrelated to the TIC owners, their agent, or the person organizing the co-ownership arrangement (the promoter). The lessee then incurs the risks and reaps the rewards of any development. However, if the TIC owners or the promoter have no financial or other arrangement that relates to the lessee’s development success, then how do they benefit from the enhanced value of the property resulting from the development? This structure raises many issues, and there are not yet any clear answers.

Owners must retain the right of partition.

Under tenancy-in-common principles, each TIC owner owns an undivided percentage in the whole property. However, the right of partition (at least theoretically) gives each TIC owner the right to separately own a specific percentage of the co-owned property. Although actually partitioning a property to sell a percentage interest is usually impractical and/or legally impossible (if for instance the zoning laws have a minimum size for a property), the alternative remedy is to force a sale of the entire property 1031.

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