1031 - Tenants in Common (TIC)
Included in Berthel Fisher's diverse array of products are the Tenant in Common (TIC) investments. TIC's are real estate endeavors involving two or more people with undivided asset ownership in a common property. Each co-owner receives a personal property deed at the time of closing for their percentage of interest in the estate. TIC's are generally professionally managed properties utilized to help generate cash flow.
An investment in a Tenant in Common property may qualify for a 1031 tax exchange. 1031 refers to a section of the IRS tax code allowing property owners to sell one or more of their properties and exchange with one or more "like-kind" replacement properties. The tax code enables a taxpayer to sell investment property with deferred tax treatment on any resulting gain - preserving the sale proceeds for the purchase of another property.
1031 TIC's contain significant risks that an investor should be aware of and they include: Purchasers will be required to rely on a third party manager to operate the property purchased, and will have little control over the compensation paid to the third party manager. TIC interests are generally difficult, if not impossible to sell, and are therefore illiquid. Tenants can default, which can cut off cash flow to investors. TIC interests are not diversified, so investors are more exposed to risk of market fluctuations in real estate values. There are substantial cost associated with a 1031 investment and can offset the benefits of an exchange. There are significant tax risks from acquiring property as replacement property in a Section 1031 tax deferred exchange and changes in IRS 1031 tax code could impact future 1031/TIC exchanges.
This does not constitute an offer to sell or a solicitation of an offer to buy any security. Such offers can be made only by a Private Placement Memorandum. These investments involve a high degree of risk and are not suitable for all investors. Please refer to the Risk Factors section of any specific Private Placement Memorandum.