TIC Guidance For Sellers and Their Realtors
Evaluate the pros and cons of selling a building or multi-home lot as a tenancy in common.
The articles on this page are intended to help sellers and real estate agents evaluate the pros and cons of selling a building or multi-home lot as a SACO tenancy in common. They explain various sales approaches and describe how these have worked for prior TIC sellers. They describe the financing options for TIC developers and sellers, and where to look for this financing. They explore tax and liability issues for TIC sellers, and strategies for minimizing exposure. And they show recent TIC sales statistics and trends.
Which buildings can convert to TIC without government approval? How long does application and approval for TIC sale take and how much does it cost?
Learn about tenancy in common construction/acquisition loans with partial releasing, and assess the individual TIC takeout financing options.
TIC developers do not face the same liability risks as condominium developers, and are sued no more often than sellers of existing rental apartments.
Sell TIC shares gradually as tenants vacate without increasing property tax or risk, and defer capital gains tax.
Tenants often buy their apartments when their building converts to TIC. Example of how TICs are sold to current tenants and how tenants organize a buying group.
This 2014 study by San Francisco’s legislative analyst examines the profits made when developers evict tenants under the Ellis Act and sell the building as a TIC. Note that the results do not take into account amounts expended by owners to repair or renovate, or the number of years taken to achieve a profit. (1131 KBytes, PDF)
2013 TIC sales were up dramatically for the third strait year, and look poised to continue their upward trajectory. Realtor Jesse Fowler discusses sale statistics and other 2013 TIC trends.
Proposition G, a punitive tax on the sale of property held for less than five years, will be decided by San Francisco voters in November. The Prop G tax would start at 24% if the property was resold within one year, computed on the full sale price; in other words, the tax on a property sold for $3M following an 11 month holding period would be an astonishing $720,000. The Prop G surtax would be imposed on properties of 2-30 residential units. Commercial properties and single family homes would be exempt from Prop G. Condominiums would also be exempt provided they were purchased as condominiums (rather than converted). Properties that have been occupied as principal residence by an owner of at least a 10% interest for the year prior to sale would also be exempt from the Proposition G tax. (131 KBytes, PDF)