How Do Debt And Property Taxes Work?
When you invest in a TIC property, you own a fractional interest in the property alongside other investors. Each investor has their own percentage of ownership, which is typically determined by their initial investment amount.
Now, when it comes to debt, each TIC investor is responsible for their portion of any outstanding debt on the property. So if the TIC property has a mortgage or other types of loans, each investor is responsible for paying their proportionate share of the debt.
As for property taxes, TIC investors are also responsible for paying their share of property taxes based on their percentage of ownership. This means that if you own a 30% stake in a TIC property, you are responsible for paying 30% of the property taxes.
It's worth noting that TIC investments have some unique tax considerations compared to other types of real estate investments. For example, TIC investors can use a 1031 exchange to defer capital gains taxes when they sell their fractional interest in the property and reinvest the proceeds in another TIC property.
Overall, TIC investments can be a great way to invest in high-quality real estate properties without having to take on the full burden of ownership. However, it's important to understand the potential risks and responsibilities involved, including your share of any debt and property tax obligations.
Consider These Tax Facts as Tax Day Approaches
We'd love to guide you through the 1031 process, let us know how we can help!