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Real Estate Loan Workouts and Restructurings For Tenant In Common Owners
01/28/10
Author(s): Edward J. Hannon
Those involved in real estate investments are aware of, and often frustrated with, the tax burdens associated with the sale of investment properties. Therefore, when the Internal Revenue Service offered some relief in the form of the tenant in common ownership structure for use in tax-free like kind exchanges in 2002[1], the structuring of deals using the tenant in common structure (“TIC Structure”) became increasingly widespread. Over time, experience has taught us that a variety of burdens come along with the tax benefits associated with the TIC Structure, especially when the property is underperforming. This article provides a general overview of the TIC Structure and offers guidance for handling the multitude of its associated issues.
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[1] See Section 1031 of the Internal Revenue Code of 1986, as amended, and Rev. Proc. 2002-22.
