Does the stress of monthly rent collection and after hour plumbing
problems make you feel like a performing seal at the circus? You're
trying to keep a spinning beach ball balanced on your nose, at the
same time that you're wildly clapping your flippers together hoping
to please an unappreciative audience.

Does thinking about selling your investment property make you
feel like Bozo the clown? Having to paint on a happy smiley face
when thinking about the large percentage of your profits that
you're going to lose to capital gains tax makes you frown?

There is a way to move on and leave the circus behind.

It's called a 1031/Tenant In Common (TIC) Exchange. This kind of
deferred capital gains tax investment is an attractive option for
owners of investment property who are looking to get a return on
their equity without having nearly 30% of their profits swallowed
by capital gains tax.

Under the regulations of the 1031/TIC Exchange program, an
investment property owner can "exchange" their current
commercial property for a "like-kind" investment property of equal
or greater value, deferring the payment of capital gains taxes and
maximizing their profits.

A relatively new tax program, the 1031/TIC Exchange program
wasn't sanctioned by the IRS until 2002. Many commercial
property owners who might qualify for the 1031 deferred tax
program don't know that it's a viable option available to them.

Qualified investment property owners will discover that there are
other benefits to the 1031/TIC Tax Deferred Exchange program.
You'll have a monthly income stream from your investment
property, without the hassles that go along with being a hands-on
landlord. And your new 1031/TIC Exchange investment property
will pass directly to your heirs at the stepped up basis (according
to current tax law). Your beneficiaries won't have to pay capital
gains tax.

There are three very important elements of the 1031/TIC deferred
tax transaction that every investment property owner should
know:

" You'll need an unbiased third party qualified intermediary,
perhaps a lawyer or qualified CPA, who will handle all of the
paperwork and make sure the IRS guidelines are followed.

" You'll need to work with a quality 1031 Sponsor Company
with a continuous inventory of grade A commercial real estate.

" You'll need to make sure that your new commercial
investment is well maintained and serviced by a reliable property
management company with a great track record and years of
experience.

The 1031/TIC Exchange transaction can be a bit complicated for
the novice. Attempting it without the guidance of a professional
financial advisor, who specializes in this kind of deferred capital
gains tax program, could lead to some unexpected and
unsatisfactory results.

You could find yourself involved with a 1031/TIC sponsor company
that handles poor quality real estate investments that may need
work have little appreciation potential. They may have high tenant
turn-over and require constant maintenance. You'll need to make
sure the 1031/TIC sponsor company you're working with handles
only quality real estate. This is often high end office space leased
to long-term corporate clients.

You also want to avoid working with an unreliable property
management company. Poorly managed properties make owners
of 1031/TIC investment properties the targets of lawsuits from
unhappy tenants, and may lead to eventual loss of equity as the
building depreciates instead of increasing in value.

You can't use a family attorney or CPA to generate the paperwork
necessary for the 1031/TIC exchange. You need to find an
unbiased third party who is experienced with this capital gains tax
deferment transaction. There are many deadlines that must be
adhered to when you're making this kind of property exchange. If
they are not met, you'll find yourself paying those capital taxes out
of your own pocket, despite your good intentions.

There is a way for you to get out of the circus ring and into the
audience enjoying the performance.

For investment property owners who are interested in the
1031/TIC Exchange program, working with an experienced financial
advisor is the only way to avoid all of the pitfalls of this complicated
transaction.