TIC 1031 Exchange: Security Or Real Property?
I've already sold a rental property, identified three properties, (am beyond my 45 day identification period) and am trying to make a decision between the two I like best. Here's my problem, they both offer similar returns but one is structured like a securities investment and the other is more like a traditional Triple Net lease. Both sponsors tell me that the way the other does business is subject to scrutiny by the IRS and possible disallowance of the exchange. Does anyone have any thoughts on this or any referalls to online info that might help me with my decsision.?
It is difficult to answer this question with out more details. However, I can tell you that there are many TIC Sponsors out there that are packaging their TIC Interests as a security. The IRS has issues Revenue Procedure 2002-22 which details the requirements for this type of structure. Most sponsors can not meet all of them, but it will at least give you some guidance. It essence, the TIC Interests are real estate interests for real property law and for tax purposes, but they must be packaged and sold as a security interest pursuant to the Securities and Exchange Commissions position. I would be happy to provide you with more details and comments if you like, just contact me and let me.