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What Are The Tax Implications Of TIC Investments?

TIC, or Tenants in Common, investments can have tax implications for investors. Here are some of the key tax considerations to keep in mind:

  1. Pass-Through Entity: A TIC investment is a pass-through entity for tax purposes, meaning that income and expenses flow through to the individual investors. This is different from a corporation, which is a separate taxable entity.
  2. Depreciation: As a TIC investor, you are entitled to depreciation deductions based on your share of the property. This can help to reduce your taxable income.
  3. Capital Gains: If the property is sold, any gain will be subject to capital gains tax. The tax rate will depend on how long the property was held and the investor’s tax bracket.
  4. Basis: Your tax basis in the property will be determined by your share of the purchase price, plus any capital contributions or assumed debt.
  5. Passive Activity Rules: TIC investments are considered passive activities for tax purposes. This means that losses from the investment can only be used to offset passive income from other sources and not active income like wages or business profits.

It is important to consult with a tax professional for advice on how TIC investments will affect your specific tax situation.