Orange County Financial PlannerSimplify Your Financial Affairs
Patrick L. Horn, CFP
P&H Asset Management, Inc
7545 Irvine Center Drive Suite 200
Irvine, CA 92618
Office: (949) 261-7900
Fax: (949) 567-5854
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1031 Exchange

1031 Tenant In Common Exchanges

1031 TIC Exchange

It's a basic fact that the large tax burden that often accompanies the sale of an investment property can be a troubling issue for many property owners.  Thankfully, this burden can be removed through an Exchange of real estate, effectively trading one investment property for another.  The §1031 Tax Deferred Exchange offers a great solution for those needing to defer the capital gains tax that arises with the sale of real estate.

A successful exchange results in the taxpayer being able to utilize 100% of the proceeds from the sale of property to purchase a new property thereby deferring the capital gains taxes.

Real estate owners can pursue many different investment objectives with 1031 Exchanges including greater leverage, diversification, potentially improved cash flow, geographic relocation, and/or property consolidation.

Advantages of Undivided Tenants-In-Common and Delaware Statutory Trust Interest Ownership

The purchase of a TIC or DST ownership interest may solve many of the issues involved in successfully completing a 1031 Exchange. 1031 TIC and DST advantages include:

  • Economies of scale
  • No active management hassles
  • Potential increased after-tax cash flow
  • Pre-arranged financing
  • Can be identified & closed in a timely manner
  • Investment can often be diversified into more than one property

How will a Tenants-In-Common (TIC) or Delaware Statutory Trust (DST) 1031 Exchange benefit you?

1031 Real Estate ExchangeWith a TIC or DST 1031 Exchange, you no longer have to feel burdened by your real estate.  Through your management contract, a manager will be retained to manage the asset while you enjoy all the benefits of income property ownership - with no property management duties.

Your income from the replacement property may be higher than what was being received from the original property.  You can potentially earn cash flow that may be up to 60% sheltered by the depreciation of the new basis in your TIC purchase.

Tenant-in-common offerings typically begin with an attractive cash-on-cash return.  Of course, this is real estate, so the cash flow can fluctuate, up or down, based on many factors including, but not limited to, changes in tenant occupancy, expenses, market conditions and environmental issues.