Is there a way to sell properties you own and put the proceeds in a vehicle to avoid capital gains? Tenants in common deals, also known as 1031 TIC property exchanges, have promised such a loophole, although many of them may not make sense now.
A combination of the real estate boom and the tax-free exchange benefit pushed TIC sales from $150 million past $2 billion, according to FINRA, the securities industry regulator. Yet due to the depressed real estate market and possible misrepresentation by sponsors, many of these deals are coming under scrutiny. A few have been the subject of arbitration claims against brokers selling them.