Many people think real estate is a good investment. It is a reliable source of income, and it appreciates over the years. Of course, bigger properties mean bigger income. Most people cannot buy an office building or apartment complex on their own.
However, they can get into a tenancy-in-common or TIC real estate, which firms such as 1031 Exchange Place can help you with.
What is TIC real estate?
You can think of TIC real estate as a sort of cooperative. You pool your resources with a few other people to buy a large investment property. You will own it with the other investors. Each of you will hold a deed as a tenant in common. The part you own will depend on how much you put in.
In most cases, someone else other than the owners will manage the property. You can expect to make about 6% returns a year on your investment. In some cases, TIC real estate can qualify as a Section 1031 exchange for a tax deferment.
What is a Section 1031 exchange?
Section 1031 is a section the IRS code. Under this section, a person can sell an investment property without paying tax on the sale. This will only happen if the seller uses the money to buy another investment property. In essence, the seller exchanges one property for another.
You can use the money from the sale of an investment property to buy TIC real estate and not pay taxes. However, it has to be a like-kind property. This means the exchange has to be for similar types of property as defined by the IRS.
TIC real estate under Section 1031
You can save quite a bit of money if you can qualify for Section 1031 when buying TIC real estate. However, it can be tricky. It is easy to make a mistake if you are not very familiar with the rules. It can also be hard to find a like-kind property.
You can avoid many problems by consulting with a Section 1031 tax exchange specialist. Some can help you find TIC real estate that will qualify under Section 1031.
TIC real estate is a good option for small investors. It is even a better one if you can qualify for Section 1031 tax deferment. Consult with an exchange specialist to get the best deal for your investment property.Tags: investment, Properties, Real Estate