1031 Tenant-in-Common Exchange

The 1031 exchange is a long-standing feature of the U.S. tax code in which an individual may exchange one real estate property for another one, while indefinitely deferring capital gains tax.

In recent years, financial advisers have begun offering tenant-in-common 1031 exchanges, in which your home is exchanged for a part interest in an income property managed by the adviser. In effect, you are trading your home for a long-term income stream, without paying capital gains tax.


The tax benefits here can be enormous. It’s well worth your time to understand this somewhat complicated feature of the tax code, as it may save you tens or hundreds of thousands of dollars in the form of deferred tax.

If you own a home that has appreciated substantially in value, the 1031 tenant-in-common exchange provides an opportunity to exchange your home for an income investment while indefinitely deferring your federal capital gains tax on the home — affecting potentially hundreds of thousands of dollars in tax payments.


As a co-owner of a TIC property, you lack control over the investment. The TIC income property is controlled by an investment adviser, and so you remain dependent upon his or her judgement and ethics to invest well, offer timely payments, etc.

Some TIC investment advisers charge high fees — as much as 20% of the value of your home — to broker the exchange. This may still be worthwhile given the tax benefit, but you should consider the exchange carefully, and with the advice of a disinterested third party investment adviser such as your accountant.

Who to Contact:

Alan Fruitman Realty – Imagine owning income property with no property management, no vacancies, no leaky faucets and no difficult tenants.

Investment managers: List your offering free