1031/TIC investments - Foreign investors can maximize their Profits

Despite the recent housing turndown foreign investors still consider the US market quite stable and are buying properties at a record pace.  The combination of a buyers market and the weak US dollar has created a surge in overseas investors that has helped soften the market downturn in some hard hit states like Florida.  These investors have a huge opportunity with combination of 1031 Exchanges and Tenant In Common (TIC) investment properties. 

The primary benefit of 1031 exchanges is the deferral of capital gains tax and depreciation recapture on the sale of investment property.  A less known tax consequence for foreign investors is the addition of a foreign investor, or FIRPTA, withholding of 10% applied to all properties sold in the United States by nonresident individuals or corporations.  The good news is that the FIRPTA tax is also deferrable under section 1031 and when combined with the capital gain and recapture taxes can result in very significant tax savings.

TIC investments are an increasingly popular option for 1031 investors because they allow smaller investors to purchase institutional quality properties without the management headaches.  That passive ownership distinction is doubly important if the owner is located outside the country and makes the combination of 1031 Exchanges and Tenant In Common (TIC) ownership a great way to maximize real estate investments.