One of the most promising retirement strategies that has emerged from the Tenant in Common enabling IRS ruling is the use of Tenant in Common ownership as an retirement income producer. By coupling the historic advantages of large investment grade real estate with the partial ownership afforded by Tenant in Common retirees are enjoying asset security and generous monthly income.

Net income from investment grade real estate means investor assets are earning money to pay expenses instead of investor assets being liquidated to pay expenses. Our Tenant in Common properties are currently generating from 7% to 8% annual income after all expenses. That is true cash income that is paid monthly. Tenant in Common property appreciation is above and beyond the current income and that appreciation accrues 100% to the investors. A portion of the current income is sheltered from taxation through depreciation tax allowances meaning more money is available to meet investor needs.

Property appreciation is taxable at the lower capital gain rate or may be deferred entirely through a Section 1031 Tax Deferred Exchange. The Tenant in Common investment also acquires a “stepped up” basis upon the death of the investor, an important benefit for investor concerned with estate issues.

Tenant in Common property is eligible to be held in Self Directed IRA Accounts. Many investors transfer a portion of their retirement account into a separate IRA specifically to enjoy the income advantages from Tenant in Common investments. The income can be sufficient to satisfy the minimum withdrawal requirement. This allows investors to receive income without selling assets.

There are a number of IRA custodial firms experienced in holding Tenant in Common real estate in self directed accounts. The real estate is held in the name of the account for the benefit of the owner/beneficiary. The net income flows into the account where it then can be distributed in accordance with statutory IRA guidelines. If the property is sold the sale proceeds flow into the account tax free and can be reinvested in another Tenant in Common property or other suitable investment.

More and more retirees are moving portions of their retitement accounts into Tenant in Common investments. The combination of strong monthly income and investment grade real estate security is an attraction many retirees are finding irresistible.

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