What To Consider Before Investing in Tenants-in-Common (TIC) Properties
Tenancy-in-common (TIC) investments have been gaining in popularity in recent years, with investors enjoying tax deferral through 1031 Exchanges. Plus, fractional ownership allows you to access income from larger, professionally managed assets that would be otherwise out of reach.
What Is a Tenants-in-Common House?
In real estate investing, one property doesn’t always mean one owner. There are various property types where multiple people may hold title to a single asset, such as inherited homes and investment properties. One structure that allows such an arrangement is the tenancy-in-common (TIC). In this type of ownership, you own fractional interests and have equal rights of ownership to the TIC property.
Can a TIC Structure Be Used for a Home Loan or Investment Property?
Many investors have recognized the value of tenancy-in-common (TIC) properties, offering benefits like tax-deferral through 1031 Exchanges. However, acquiring these assets can be trickier than you initially thought. In particular, securing financing to purchase the property can be complex due to the fractional ownership nature of TICs.
Are There Any Common Mistakes To Avoid When Completing Form 8824?
As you likely already know, investing in 1031 exchanges brings benefits like tax deferral and enhanced diversification, but the IRS imposes strict rules and reporting processes for those who undergo this transaction. One critical document that you must accurately fill out is Form 8824, which is also called the Like-Kind Exchanges form.
What Is the Purpose of IRS Form 8824 in a 1031 Exchange?
Many investors recognize the appeal of 1031 exchanges when it comes to tax-deferral and wealth management, but it’s important to note that they do come with strict reporting requirements. One of the primary IRS forms to consider is Form 8824, which is also called the like-kind exchanges form.
Are There Specific Rules for 1031 Exchanges in California to Be Aware of?
It may seem that only federal tax laws apply to 1031 exchanges, but you have to remember that states also impose capital gains taxes. California, one of the most prolific states for real estate investing, follows federal rules regarding like-kind exchanges, but there are also state-specific rules that bodies like the Franchise Tax Board (FTB) implement.
