Shared Costs, Full Benefits: Why Fractional Ownership Makes Sense in Hawaii
What is Fractional Ownership?
Fractional ownership can allow you to own a luxury vacation home in Hawaii at just a fraction of the cost. This legal form of share ownership can be done with up to six owners on one property. Each owner splits the costs, the care and the benefits of owning a home in Hawaii. Different terms explore the different time frames and functions for use. You also own a fee simple portion of this property and, therefore, have the benefit of appreciation and the ability to sell your share, as you would your home, at any time in the future. Here is one great option to consider!
Benefits of Fractional Ownership
Homeownership in Hawaii has become increasingly costly. With fractional ownership, you and a group of other homeowners own the fee simple right to the land and home that you purchased. That means you will benefit from appreciation of land value over time, unlike timeshare or leasehold properties where you don’t own the real estate.
In addition, if your primary use is for investment purposes, it may qualify for a 1031 Tax Deferred Exchange.
Lastly, the obvious benefit is that you will be able to use and enjoy a home that you might not otherwise be able to afford as a vacation home. Once you lock up after your vacation, you do not have the full burden of cost maintenance, rather you share it with your team. Here are some homes that are currently being offered as fractional ownership.
What to Watch Out For
It is important to establish a good contract for the property you purchase. There should be one in place for existing homes owned as a fraction that your attorney can review. If it’s a new purchase, it is important to use a good attorney to draft the paperwork so that all of the fractional owners are completely aware of their responsibilities and their benefits. Understanding your goal in the ownership is also essential. If there is a set time every year that you would like to use the home or rent out the home, make sure that what is available is what fits your needs as well.
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