Fractional ownership of real estate

Affordable Luxury In addition to luxury properties, fractional ownership can also include yachts, helicopters, supercars, or art. The advantages of such a scheme are that you can live the life of a millionaire for affordable money, feeling all the delights of a luxurious lifestyle. The scheme for buying a fraction of real estate is that for a relatively small amount you can buy a share of prestigious housing. “With the help of a deal using the fractional method, the middle class can, for example, buy a tenth part of a very expensive mansion in London Chelsea worth a million euros for 100,000 euros and enjoy using it in the period agreed with the management company,” says Igor Indriksons , real estate investment manager, founder of the consulting portal Indriksons.ru. The property is distributed among several owners, who can use the entire area of the housing, but for a certain period of time. With such a scheme, the buyer fully owns a share of the property, and this is legally confirmed, the owner's rights are protected by law. Visiting times are usually limited to three to six weeks. If the number of weeks is not enough for the owner, then two fractions can be purchased. As a rule, the system of distribution of length of stay is flexible and is discussed every year. For many, buying an expensive overseas home to spend just a few weeks of their vacation year can seem wasteful. Fulvio Di Rosa, architect and creator of the unique Borgo di Vagli project in Tuscany, says: “As a rule, the annual vacation lasts about 4-5 weeks, and buying a property worth 1 million euros in order to spend there only a few weeks a year, seems inappropriate. " “First of all, such a scheme may be of interest to people who have relatively limited financial resources, but want to own real estate abroad,” says Elena Yurgeneva, Regional Director of the Residential Real Estate Department of Knight Frank Russia & CIS. “At the same time, the investor can also realize his investment ambitions through this scheme. With an increase in the capitalization of the entire object, the cost of its part will also increase. In addition, it is worth noting the following nuance: the tax will be calculated based on the value of the part of the real estate owned by each of the investors. Thus, with a progressive calculation scheme, the total tax on the property will be lower than in the case of one owner. " Not just luxury, but investment Buying a share of a home is generally viewed not only as an affordable luxury holiday opportunity, but also as an investment. Igor Indriksons notes that fractional real estate, as a rule, is quite liquid and, accordingly, attractive for those who seek to invest wisely so that their money works and brings profit. At the same time, the investor is not bound by obligations to other owners not to sell his share and has the right to sell it when he considers it necessary or profitable. Fulvio Di Rosa says one of the benefits of fractional ownership is perpetual ownership of the home, as with full ownership. Such housing can be sold at any time, bequeathed or donated, while its value does not fall. And the owners don't spend money on vacation rentals. Fractional ownership is not a timeshare For many Russian buyers of overseas property, fractional ownership is associated with timeshare (temporary ownership), when the owners receive a certificate of use. However, the legal bases for fractional ownership and timeshare are significantly different. With timeshare, a contract is signed with the company for a certain period of time per year, that is, in fact, time is bought, and with fractional ownership, ownership of a part of the property is acquired. With fractional ownership, the interests of the owners are protected by law, and the owners receive full ownership of the shares in the housing, which is registered in the cadastre. Timeshare is very difficult to resell, unlike fractional ownership. The risks are lower with a fractional scheme than with a timeshare, because the owner's rights are protected not only by contract, but also by law. In Western real estate markets, the purchase of housing under a fractional ownership scheme has become widespread, and now this market is estimated at billions of dollars largely thanks to a clearly developed and actively applied legal framework, says Igor Indriksons. Maintenance costs: all in a share By purchasing a share of real estate, you can save not only on the purchase cost, but also on maintenance and operating costs. Annual expenses are distributed proportionally among the owners and, as a result, the amount of these expenses will be lower than if you own your own home. In fractional ownership, the upkeep and maintenance is usually the responsibility of the management company, making it easier to own a foreign home than to maintain your own home. Fulvio Di Rosa says: “When you buy a share of real estate, you are also acquiring the services of a first-class hotel as your personal property. The maintenance of a home abroad can be burdensome for the owner, and when owning a share, as a rule, the management company is engaged in the year-round maintenance of housing. Buying a share of a home is also ideal for those looking for a new experience. In a medieval Italian village of the 14th century. Borgo di Vagli you can enjoy the authentic atmosphere of an Italian village amid the harmonious Tuscan landscape. Each apartment on the housing market in the Borgo di Vagli project with a traditional ownership scheme would cost 600,000-1,000,000 euros, and with fractional ownership - 72,500-115,000 euros. Fractions in Russia The fractional ownership scheme first appeared in the United States more than 20 years ago and is still widespread there. And amid the financial crisis, the acquisition of factions began to gain popularity in Europe - for many it is an opportunity to buy luxury housing at a lower price. However, this scheme is not so common among Russian buyers now. “Offers of participation in transactions with fractional sale of real estate have appeared in Russia since the beginning of 2012,” says Igor Indriksons. - So far, unfortunately, sales are slow. This is most likely due to the sad experience of investors in acquiring timeshares. Also, do not forget about the peculiarities of the Russian mentality - if you own, then alone and undividedly. But in the future, we see opportunities for the development of fractional real estate in Russia, using Russian assets. " Elena Yurgeneva also notes that this form of ownership has not become widespread in Russia due to the negative experience associated with the timeshare scheme, so Russian buyers are afraid to try something new. And Russian buyers of elite real estate prefer to acquire properties in full ownership and relax at a convenient time for them, and the rest of the time - to rent out resort real estate. HomesOverseas.ru