What is a TIC Exchange?

A TIC or "Tenant-in-Common" exchange, is a form of real estate asset ownership in which two or more persons have an undivided, fractional interest in the asset, where ownership shares are not required to be equal, and where ownership interests can be inherited. Each co-owner receives an individual deed at closing for his or her undivided percentage interest in the entire property. Only "Qualified Investors" are eligible for a 1031 TIC exchange investment a natural person who has individual net worth, or joint net worth with the person's spouse, that exceeds $1 million at the time of the purchase; a natural person with income exceeding $200,000 in each of the two most recent years or joint income with a spouse exceeding $300,000 for those years and a reasonable expectation of the same income level in the current year; or a trust with assets in excess of $5 million , not formed to acquire the securities offered, whose purchases a sophisticated person makes. Please read the important ...  more

The TIC, or Tenant in Common, Exchange is a process that makes it possible to sell property without having to pay exorbitant capital gains taxes. As part of the process, the equity realized from the sold property is invested in a TIC exchange involving some type of institutional grade property. This makes it possible to continue receiving some benefit from the investment but without the need to pay the higher rate of taxes. One of the easiest ways to understand how a TIC Exchange functions is to consider an example situation. An owner of real estate such as a home or rental property may grow tired of managing the investment and incurring maintenance and other expenses. After choosing to sell the property, the former owner may find that the amount of equity in the property is not enough to reinvest in a similar endeavor. Instead, the proceeds from the sale are used to invest in a TIC Exchange. The exchange strategy makes it possible to acquire an interest in properties such as hotels, ...  more