What is Tenant In Common

Tenants in Common are property owners who can purchase another property as a single individual. There is no limit as to the number of individual who can join together in this deal. Share among the partners can be either equal or unequal and every partner has the right over the property.

The Guidelines of a TIC: Agreement

A TIC: Agreement, or Tenants in Common Agreement, is an agreement that is used to establish the rights of people who own property together but who are not related by marriage. Any people who own property together but who are unmarried are considered as being tenants in common, and the TIC: Agreement is then used to cover them and to consider an entity, the property, that they own together.

There are certain issues that should be covered by this agreement, including the division of property into individual and group shares, formulas for determining each owners’ monthly payment in advance and periodically adjusting the amount, and provisions defining when a default has occurred and to then describe remedies to solve the problem.

Advantages of TIC:Agreement

There are many advantages that people sharing property together holds from having a TIC: Agreement set into place. For one, ownership of a TIC: Agreement allows the investor to own a fractional interest in a large, institutional-grade investment property.

One of the major advantages of this agreement lies in the potential it offers for tax-free exchange treatment. A taxpayer can use a TIC investment as either relinquished property or replacement property in a qualifying tax-free exchange.

There is also the option of reselling interest in a TIC investment, because significant value could result from this decision. It is important, especially for anyone not completely educated on the agreement speak to a tax consultant or other knowledgeable professional in this area who will be able to help them decide whether or not this is going to be a smart move for them at that point.

TIC Agreement - Problems

Problems

There are also a few problems that come with the TIC: Agreement however, and these problems can easily become very complex. One of the biggest problems is that this agreement does not cover current issues, and even worse, if the persons involved do not have any agreement at all then neither will be covered and serious liabilities and expenses may occur as a result.

By being aware of both the pros and cons of this agreement before getting into it, people will be more prepared and also more understanding on what they have available to them. In summary however, these investments do offer many huge advantages, which should definitely be taken into consideration by potential investors.

As long as you also consider the practical issues that are involved here and ensure that the TIC will not be treated as a partnership solely for tax purposes, then all in all you will be making a wise decision.

Tenant In Common: Securities Or Real Estate: A Matter That Is Open To Interpretation - Part 1

Mostly, people that make TIC (tenant in common) investments will have 1031 exchange in mind and even though TIC as an industry is just a small part of 1031 market, it is still increasing at a good rate and thus worthy of serious consideration. At present, TIC can be brokered either as a securities or real estate transaction and thus there is a grey zone that exists with regard to whether Tenant in Common is Securities or Real Estate.

Tenant In Common: Securities Or Real Estate: A Matter That Is Open To Interpretation - Part II

Securities Or Real Estate Dealers/Brokers

There are a few organizations such as the National Association of Realtors (NAR) that are concerned about whether TIC that is in the form of a partnership or security, or both, will be disqualified under 1031, and furthermore such disqualification will in turn require using security dealers/brokers for security transactions and not real estate brokers because the transactions are not deemed as being real estate deals.

In fact, to be sure about whether Tenant in Common is Securities or Real Estate you need to understand what security is and what real estate means. Typically, securities involve investing money or other form of property, and investing in common enterprise based on a third person’s expertise and the intention is to earn a profit. However, there is no real clarity when it concerns Tenant in Common: Securities or Real Estate though for any TIC transaction to be qualified as 1031 tax deferral, it requires that the National Association of Securities Dealers or NASD has to step in to evaluate the TIC industry and then shed further light on whether Tenant in Common are Securities or Real Estate.

TIC: How is the Real Estate Community Involved? - Part 1

With the demand of prime properties worldwide, real estate communities are boasting of profits and capital gains when it comes to their acquired real estate. But despite the knowledge of these investors in the business, there is a way to consolidate as many properties as they can to maximize their profits.

Tenancy in Common or TIC allows the real estate community to share an ownership of a certain property with two or more people. The individual’s share may depend on how much they invested on the property upon its acquisition, as stipulated in the deed, will or title for the joint venture.