1031EXCHANGEANDTIC.COM
1031EXCHANGEANDTIC.


To fully defer all capital gains taxes, all TIC 1031 exchanges must meet four separate requirements:

  • First, 100% of all proceeds from the sale of the first commercial property must be reinvested into the second, replacement commercial property.

  • Second, the amount of equity ( commercial property value minus loan value) of the replacement commercial property must be equal to or greater than that of the relinquished commercial property.

  • Third TIC 1031 Exchange Requirement: By law, you must use an independent third party, called a Qualified Intermediary, to hold the proceeds of the sale. The Qualified Intermediary also will prepare the legal documents required to link together, as a qualified exchange, the sale of the old commercial property and the purchase of the new commercial property.

  • Fourth TIC 1031 Exchange Requirement: exchanged commercial properties must be like kind. For a commercial property exchange this means real-commercial property for real-commercial property, but not necessarily land for land or a rental house for another rental house.

    It is often difficult in the short 45-day time frame to locate a commercial property that has the right purchase price, debt ratio, and closing schedule to meet the TIC 1031 Exchange Requirements-and then arrange any financing that may be necessary. Because there is a steady supply of TIC commercial properties available they are an ideal solution for exchangers seeking management free TIC 1031 properties with steady income.

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