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What is a TIC: Purchase Agreement?
A TIC: purchase agreement may seem rather complex to the novice onlooker, but it is really quite simple once you understand the basics, and also offers a multitude of options and potential benefits.
With this exchange, a taxpayer is allowed to postpone the recognition of gain on the disposition of qualifying property by the acquisition of replacement property that will later be identified and purchased within a given amount of time.
A TIC: purchase agreement is generally brokered in one of two ways: as a securitized offering or as a real estate offering. The first, a securities-brokered TIC: purchase agreement is one that is subject to federal and state securities regulation. A real estate TIC on the other hand has limited state regulation and is not federally regulated.
Who is a Candidate?
You may be wondering whether you are a candidate for the TIC: purchase agreement. There are a few questions that you will want to ask yourself to find the answer here, but basically if you have capital gains or significant depreciation of the structures in your investment properties and you want to continue investing in real estate, then a TIC: purchase agreement may be ideal for you.
How to Get it
If you are interested in getting one of these TIC investments, the first thing you should do is speak to a financial advisor at your bank. They will assess your current financial situation, and speak to you about what types of properties you are interested in purchasing.
They may also be interested in speaking to the person or persons that you are planning to have own the property with you, and take a look at their financial background as well.
Before going through with this investment you should also learn the most important issues having to deal with TIC investments. This includes understanding that TICs typically provide positive cash flow, that TICs are securities because the investments are sold through private placement offerings as securities and that if a TIC gains value, you profit.
By being a TIC investor you will hold a deed for your percentage of the TIC investment and share the total gains made with your partner or partners. The fewer partners you share the property with the more you stand to profit in the long run, but generally you will make more profit quicker if you have a few partners because you will be able to buy a larger piece of property upfront.
About the Author Kathryn R. Landry is a business writer for TIC Advisors, Inc. A company that can give you the most complete information on a 1031 exchange or TIC property ownership.
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