Any syndicated investment created through a Tenant-In-Common (TIC) structure. Under a Tenant-In-Common structure, each investor (known as a co-tenant or co-owner) holds an undivided, fractional interest in the property. Tenant-In-Common investments are deemed to be a form of direct ownership which makes them 1031 exchange eligible, provided that the vehicle is not treated as a partnership for tax purposes.
In order to utilize the TIC structure as a 1031 exchange compliant investment each co-tenant must receive his or her pro-rata share of income and expense allocations. This is a key difference from partnership or limited liability company (LLC) legal structures which allow for disproportional returns and promoted equity. Another key requirement of a Tenant-In-Common investment as it relates to 1031 exchanges, is that the investment vehicle is typically limited to 35 co-owners.