Tenant In Common & 1031 Tax Deferred Exchanges
Helping investors understand TICs & 1031 Tax Deferred Exchanges
Can I do a 1031 tax exchange of Real Estate into a Tenant In Common TIC being sold as a security?
October 26th, 2006 by Troy
Can you sell your real property and do a 1031 tax deferred exchange into a securitized Tenant in Common (TIC) Property?
The answer is…Yes…at the moment. For quite some time the rule of the 1031 tax exchange required someone to exchange similar investments. ie. real estate for real estate OR security for security. This was never an issue until 2002 when the almighty IRS began allowing a TIC purchase as a viable means of a 1031 tax exchange on investment property as a way to defer capital gains taxes on real property. Many TIC properties are securitized, however, they are real estate. Because they are real estate the tax deferred exchange is allowed and you won’t have to worry about the IRS knocking on your door.
However, this has been a source of several questions over the past few years and this ruling could ultimately be changed. Therefore, please be sure to ask your CPA or Real Estate Attorney what the current ruling is before considering a securitized TIC as an option for your 1031 tax exchange.