There are a few terms in 1031 exchanges that need to be explained in detail. Tenant in Common (TIC) is one such term. Simply put, TIC is a form of holding title to real property. It allows the owner to own an undivided fractional interest in the entire property. Also known as fractional ownership, TIC has become a popular choice among real estate investors seeking replacement property for their IRC Section 1031 tax deferred exchange.
This co-ownership structure allows you to own an undivided fractional interest in an entire property. You also get a share in your portion of the net income, tax shelters, and growth. Further, you will receive a separate deed and title insurance for your percentage interest in the property and have the same rights as a single owner. Allstates1031.com reports:
Because Tenants In Common opportunities are often “packaged” with management and financing in place, Tenants In Commons offer superior efficiencies in the identification, acquisition, financing, closing, and operating stages of real estate ownership. Fractional ownership also provides you with the ability to diversify your 1031 tax-free exchange into more than one property and to participate in potentially larger, institutional quality properties. Thus, small investors in one area of the country may participate in large industrial, commercial, and residential property investments all around the country with professional management.