Exiting a TIC

Typically, most TIC owners exit their investment when the entire TIC property is sold. In most cases these properties are purchased by REITs (Real Estate Investment Trusts), pension funds, investment funds, large real estate investors or, in the cases of older properties, a developer who is planning to rehab the property. When the entire property is sold there is a typical process that is followed.

• a potential buyer approaches the asset manager, or the asset manager believes that the property has neared its targeted appreciation goal
• the asset manager sends a letter to the TIC owners asking if they would like to test the market and list the property (usually requires a 60% majority)
• the asset manager presents all offers to the TIC owner with a recommendation on the one they believe is best
• the asset manager sets up a conference call for all TIC owners to discuss the offers
• the TIC owners vote on whether to sell and if they want to sell, which offer to accept (usually requires a 100% agreement of the owners – there are exceptions allowing a dissenting owner to be bought out by the majority)

TIC Interests are long-term investments. Currently, there is no established secondary market for TIC Interests. If a sale is made the investor may receive less than originally invested.

The death of a TIC owner does not trigger an exit of TIC ownership, but does trigger an end to the §1031 exchange process. The TIC owner’s heirs receive the TIC interest at a stepped up basis meaning that they receive it at the fair market value on the date of death thereby wiping out the capital gains and depreciation recapture liabilities. All the heirs now own the TIC interest as a single unit but upon its sale must exit as separate entities. The heirs can each choose to exchange out and into separate properties or take the money and pay taxes on any appreciation that has happened from the date of death of the original owner.

However, in all these cases you should check with your CPA or tax adviser when considering exiting a TIC because not all circumstances are alike.

AMBAR Financial Group does not offer legal or tax advice. AMBAR encourages clients and visitors to seek independent legal and tax advice from competent professionals to discuss their personal financial situations. Registered Representatives may only transact business in states where they are registered, or exempt from registration. Currently we have Representatives registered in: AL, AZ, CA, FL, MN, MO, PA, TX. If your resident state is not listed, please contact us at 408-379-6510. Under normal circumstances, securities licensing procedures for additional states may take 24-72 hours. We will not effect or attempt to effect securities transactions, or provide personalized investment advice to, or communicate directly with residents in a state in which a Representative is not registered.

Property photos shown here are being provided for educational purposes only, to illustrate the different property types available in the real estate market. These photos are not intended to represent any particular type of TIC offering nor are they intended to represent any current or future TIC offerings.