TIC Overview

A Brief Summary of TIC Exchanges

Section 1031 exchanges may include acquisition of real estate interest through Tenant in Common(TIC) ownership. A TIC property is one in which an investor owns an undivided fractional interestin an entire property and shares in the pro-rata portion of the net income, depreciation, amortization,and property appreciation. The investor receives a separate deed and title insurance for itspercentage interest in the property. Each tenant in common is entitled to share with the othertenants the possession of the whole parcel and has the associated rights to a proportionate shareof rents or profits from the property, to transfer the interest, and to demand a partition of theproperty. These rights generally provide a tenant in common many, but not all, of the benefits ofsole ownership of real property.

Because TIC opportunities are often "packaged" by a sponsor with management and financing inplace, TICs offer efficiencies in the identification, acquisition, financing, closing, andoperating stages of real estate ownership.

TIC properties provide an opportunity for diversification, and low equity requirementsthat may allow smaller individual investors to invest in large institutional investmentproperties. But, TICs involve additional costs over the costs of direct ownership.Income generated from a TIC property can often be sheltered from tax through using depreciationand interest deductions.