1031 Tax Deferred Exchange And Tenant In Common: The Main Advantage Is Being Able To Defer Paying Capital Gains Tax



A few years back or more precisely in March of the year 2002, the IRS came out with its Rev. Proc. 2002-22 that laid out the parameters that spelled out how structure TIC transactions would enable investors to complete 1031 TIC exchange while also recognizing the fact that the exchange involved valid investment property (like-kind). This is perhaps the most important aspect as far as 1031 Tax Deferred Exchange and Tenant in Common goes.

Not A New Concept

In fact, 1031 Tax Deferred Exchange and Tenant in Common is not something with which people were not already conversant with because in fact, most people are well aware of saving money through deferring paying capital gains tax provided they did the 1031 exchange in the proper manner. As a matter of fact, everybody knows that TIC is nothing but being able to co-own properties and furthermore, as long as such co-ownership is organized in the proper manner, investors may get out of hundred percent ownership in properties that they have relinquished and instead get into co-ownership or exchange into properties in which they have fractional ownership or TIC as it is also commonly known as.

Also, when considering 1031 Tax Deferred Exchange and Tenant in Common, you can help but be impressed by the advantage that you get with regard to deferring on paying capital gains tax. All that is required is for you to deal in structured property and to ensure that your circumstances as well as actions strictly adhere to 1031 rules. If you ensure these conditions are complied with, as an investor you can then sell your high value property and then defer, though not avoid, paying capital gains tax.

Keeping in mind this very important aspect with respect to 1031 Tax Deferred Exchange and Tenant in Common, investors will naturally be motivated in dealing in TIC properties though before proceeding further, it is always a good idea for them to get professional advice from an accountant, qualified attorney or other kind of advisor who knows the ins and outs of 1031 Tax Deferred Exchange and Tenant in Common and who can thus guide you to take the proper steps to qualify for 1031 tax deferred exchange.

By using 1031 Tax Deferred Exchange and Tenant in Common to defer your capital gains, the amount so deferred can then be put to use in buying a new, though like-kind, property. It thus means that with more money being invested rather than paying it out in the form of taxes, you can then apply this cash to create larger investment in equity.