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What Is A TIC And How Are They Used For 1031 Exchanges?
“TIC” is an acronym referring to Tenant-In-Common (TIC) investments in properties by multiple 1031 exchange investors. Tenants-In-Common, is a legal term that describes a form of ownership by more than one party in real estate, or any asset. In this case, the term “tenant” means a co-owner of a property, and not someone that rents the property. The distinguishing features of the tenants-in-common ownership form are: All tenants (co-owners) hold an individual, undivided interest in a property; Ownership may be held in unequal shares; Each ownership interest may be separately sold or mortgaged; and Upon death of a tenant, the interest of the deceased will pass to their heirs.
Tenants-in-Common vs. Delaware Statutory Trusts
The IRS has blessed two legal structures that allow multiple, unrelated 1031 investors to invest in the same replacement property. They are Tenants-in-Common (TIC) ownership and Delaware Statutory Trusts (DST). Though both structures permit groups of investors to pool their equity to acquire replacement properties on a tax-deferred basis, the similarities largely stop there.
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