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I heard partnerships do not qualify as “like kind” property for a 1031 exchange. How does the purchase of a Tenant In Common (TIC) interest differ from a partnership?

April 26, 2017common heard partnerships Property purchase qualify tenant

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I heard partnerships do not qualify as “like kind” property for a 1031 exchange. How does the purchase of a Tenant In Common (TIC) interest differ from a partnership?

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The most profound reason is a 2002 IRS Revenue Procedure ruling. This ruling, Revenue Procedure 2002 dash 22, essentially set forth the guidelines whereby a TIC would be recognized as real estate, not as partnership. Hence, it could be used in a 1031 tax-deferred exchange. There was a small group of companies, mostly in southern California, offering TIC properties in the 1990’s as passive investment options for their clients. However, since the landmark ruling in 2002, TIC offerings have grown into a multi-billion dollar industry.