Investors have used 1031 exchanges (also known as Starker Exchanges) since 1991 to defer taxes, while exchanging existing properties for newer properties.

An IRS ruling in 2002 (View Revenue Procedure 2002-22 in full), expanded the pool of eligible properties available for individual investors. The ruling pertains to joint tenant in common (TIC) legal structures or co-owned real estate (CORE), which allows individuals to own a fractional interest in a property, such as an office building, apartment complex or shopping center. While tenant in common investment ownership has been around for quite some time, the 2002 ruling allowed investors to feel confident that the IRS would allow a tenant in common structure for 1031 TIC exchanges.

The ruling in conjunction with a rapidly appreciating real estate market and an increased interest in 1031 TIC properties led to rapid growth in tenants in common and CORE investments. A 1031 TIC structure will allow investors to pool their resources and purchase larger, higher valued and better positioned properties than they might otherwise have access. Typically these more prestigious properties can also open doors to high quality lessees, such as Fortune 500 companies and government entities, reducing owner tenant risk. Real estate firms (Sponsors) organize the properties with professional management, removing day-to-day owner concerns.

TIC 1031 tenant in common exchanges are typically handled through broker-dealers.