Tenancy in Common Explained

Tenancy in Common (TIC) is a way for two or more individuals to have an undivided fractional ownership interest in a single piece of real property. With a TIC, each owner has individual rights and obligations related to the property. These rights equal the proportionate share of the owner’s interest. Tenancy in Common is a popular way for individuals with shared interests outside of property ownership to continue that relationship with their joint property ownership.

Having an ownership interest in a TIC gives an investor the right to his or her proportionate share of net income, tax benefits and appreciation. The TIC owner is treated similarly to a fee simple owner and receives an individual property deed and title insurance for his or her share of the property. A TIC owner may bequeath his or her interest to any beneficiary upon the owner’s death.

This direct interest in real estate TIC ownership also qualifies as “like-kind” real estate for 1031 exchanges, making TICs an important part of the #1031 exchange universe. The fact that the IRS allows TICs to qualify for 1031 exchange treatment means that individual investors can now graduate to ownership of bigger (and potentially more lucrative) investments than they could afford on their own.

Of course, to shield themselves from personal liability arising from holding direct title to property, most #TIC investors set up Limited Liability Companies (LLCs) for the purpose of TIC ownership.

To find out how we can help you find and close on your next 1031 exchange property or to learn more about the exchange process and our qualified intermediary services, please visit our website.