What is a 1031 Exchange?

In nutshell, a 1031 tax deferred exchange, refers to section 1031 of the IRS tax code. This section discusses the ability of taxpayers to defer the payment of capital gains taxes on certain types of property (real property or real estate being one of them) if certain criteria are met. This has obvious advantages to a real estate owner or investor looking to sell one property, and "trade up" into another, more expensive piece of real estate.

1031 TIC - Tenants in Common

One of the most popular subjects today with regard to 1031 exchanges is using a Tenant in Common structure to allow an individual to trade his/her ownership interest into a larger property with other ownership interest types. When it comes to 1031 Exchanges and TIC there are many unknowns, but it appears for now that the IRS is content to let things go along on the path they are on. Many people are now able to purchase larger, investment grade properties that they would not have had access to before due to the high barriers to entry (a lot of $$$). The TIC structure is capable of this and more.