More real estate investors have been exploring the benefits of tenant-in-common (“TIC”) programs that offer an undivided fractional interest in a large property with multiple owners. Investors have been interested in TIC programs because of the advantages of having partial ownership in a larger property which could offer appreciation, cash flow, annual depreciation benefits without many of the management problems typically associated with rental property.
In 2000, the government released Revenue Procedure 2000-46 which stated that the IRS would not issue any advance rulings or determination letters on whether or not a particular TIC program represented an undivided fractional interest in real property that would qualify for an IRC Section 1031 tax deferred exchange.
Revenue Procedure 2002-22 supercedes Revenue Procedure 2000-46 referenced above. Revenue Procedure 2002-22 addresses a couple of issues:
These guidelines and conditions constitute require-ments for advance rulings and are the clearest set of principles the IRS has set out as to its thinking on TIC programs.
The following information and copies of documents must be submitted with the ruling request: