tic structure

Dear 1031x.com: Can an investor (Mr. A) partner up with another investor (Mr.  1031) who has relinquished his property and wishes to acquire another  larger ppty. Mr 1031 has $500k with a 1031 facilitator and the ppty  identified requires a down pmt of $700k. Can Mr.1031 join forces with  another investor who will provide the additional $250k in equity to  satisfy the required down payment. Can they form a TIC in this scenario.  Eventually, Mr. A and Mr. 1031 plan to have an equal 50/50 share in the  ppty. If not, what vehicle/type of entity would best suit this type of  structure. The objective for Mr.1031 is to defer capital gains realized  from the sale of his ppty.

Dear Mr. H:  Yes you can sell 100% of a relinquished property and buy a fractional interest in a replacement property in a 1031 exchange.  And, yes the tenant in common arrangement is the right structure.  Remember the person doing the 1031 exchange must not only trade equal or up in equity ($500K in your example) but also equal or up in value.  For this reason the 50-50 split may or may not work.  To reiterate the 1031 exchanger's fractional interest must be of equal or greater value than 100% oft he relinquished property.  Next time please chose us for your 1031 exchange service.  Also, I could write a tenant in common agreement for you if needed.  Sincerely,

Steve Hickox
Attorney / President

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