Definition of Fractional ownership:
Fractional ownership is a percentage ownership in an asset. Fractional ownership shares in the asset are sold to individual shareholders who share the benefits of the asset such as usage rights, income sharing, priority access, and reduced rates. The usage benefits that the fractional owners receive are comparable to those of timeshare owners.
Method of sharing the ownership of an asset that would be unobtainable by an individual. Shares of the asset are sold to individual owners and each owner will be allowed the privileges of access to the asset and share in any resulting income. The asset in a fractional ownership scenario is generally managed by a neutral party for the benefit of the owners. In the event the asset begins to depreciate in value, the management company may have the option of selling the assets and dividing up any proceeds amongst the owners. If there is any loss in the sale owners may be able to claim a capital loss. Vacation homes are an example.
Fractional ownership is a common investment structure for expensive assets such as aircraft, sports cars, and vacation properties. The fundamental difference between fractional ownership and timeshare is that with fractional ownership the investor owns part of the title rather than units of time. With fractional ownership, if the asset increases in value, the value of the shares in the investment does as well.
How to use Fractional ownership in a sentence?
- All the shareholders split the benefits of the asset, such as income sharing, reduced rates, and usage rights.
- This type of investment split is common in the purchase of expensive assets, such as vacation homes, luxury cars, and aircraft.
- Fractional ownership is an investment approach in which the cost of an asset is split between individual shareholders.
Meaning of Fractional ownership & Fractional ownership Definition