Tenants in Common
In 2002, the IRS issued guidelines
(Revenue Procedure 2002-22) governing the structure
of Tenant In Common (TIC) property investments. According
to these guidelines, a Tenants In Common, also known
as co-ownership of real estate (CORE), should have no
more than 35 investors. The typical structure includes
from 12 to 20 Tenants in Common investors in a property.
In simple language, a tenant in common
is a property owned by two or more persons at the same
time. The Tenants In Common investors possess undivided
interests in the property or designated interests of
differing sizes. Each owner retains the right to sell
his or her share in the property as he or she sees fit.
Upon death, the decedent' s interest passes to his/her
heirs named in the will who then become new tenants
in common with the surviving tenants in common.
As tenants in common you share the
income, tax benefits, and appreciation of the property
on a pro rata basis depending on your share of the property.
Purchasing investment properties
as tenants in common allows you to invest in larger, institutional
grade properties like shopping centers, ware house, industrial
property etc that costs a few million dollars.
Tenants in Common gives you the
opportunity to diversify your real estate investment
as it allows you to invest in larger properties also,
along with the smaller properties in which anybody would
invest. This is highly effective in increasing the value
and security of your real estate investment.
Ownership as
Tenants in Common gives you the chance to increase your
potential cash flow, provide you with tax write-offs
and property appreciation benefits. You can get all
these without the time commitment of active property
management that would otherwise be required if you are
having the sole ownership of a property.
Some
of the leading real estate companies source investment
properties and garner fixed rate, non-recourse financing
with institutional terms for Tenants In Common owners.
The real estate company, the lender
and the security company conducts extensive due diligence
on investment properties offered to Tenants in Common. |
