Investors utilizing a 1031 exchange are frequently turning to tenant in common investments. The benefits of a tenant in common investment are significant.

First, through a tenant in common investment, investors can satisfy their 1031 exchange with institutional-quality real estate. Combining these two strategies in a tenant in common 1031 exchange provides both the steady cash flow of quality real estate and tax deferment savings.

Second, tenant in common investments relieve investors of property management duties. Particularly as a generation of investors is entering pre-retirement and retirement life stages, property management responsibilities are no longer desirable. With a tenant in common investment, investors are able to keep quality real estate in their portfolio without the added burden of maintenance and tenancy.

Investors committed to retaining the appreciation on their investment properties are turning to 1031 exchanges. As outlined in the Internal Revenue Code 1031, capital gains tax on investment property may be deferred when another “like kind” property is purchased. There are important timeframes and financing regulations stipulated in the code, but a successful 1031 exchange preserves appreciation in investment properties for the investor. Investors must keep in mind that, if the strict timeframes outlined in Section 1031 are not met, the exchange is deemed to have failed and capital gains tax will be owed.