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Tuesday, March 2, 2010

Fractional Ownership vs. Time Share - What's the difference?


Many of the people I meet at Surfside ask me to explain the difference between a fractional ownership property and a time share property. Therefore, I thought I'd take this opportunity to list some of the distinguishing characteristics between the two, which are as follows:

1. Time share use periods typically last for only a matter of weeks, while fractional ownership use periods generally last a few months each year. In Surfside's case, units are offered for sale in quarter share fractional ownership interests. Quarter share owners own 13 weeks during the year (or a quarter of the year), or approximately one week each month.
2. Time share properties can be owned by as many as 50 other people, while fractional ownership properties are usually shared by just four to eight co-owners. In Surfside's case, there are up to four co-owners of each vacation home.
3. Title to the property does not transfer to owners of time shares. Fractional owners receive a deeded interest in the property they're purchasing.
4. Fractional ownership properties are usually more upscale and accompanied by both conveniences and luxuries, such as spas, recreational activities, wellness services, and concierge services. At Surfside, we have the North Shore's only full-service spa, an abundance of recreational opportunities, and award-winning services.
5. Fractional ownership properties can be classified as investment properties, thus allowing for tax benefits. Time shares cannot be classified in this manner.
6. Owners will likely have an easier time selling their fractional ownership interests, because fractional ownership properties are generally in greater demand than time share properties.
7. With a time share, you have ownership of units of time at a particular property, while a fractional ownership interest provides you with deeded ownership of the property.
8. Typically, when a time share is resold, it will have depreciated significantly from its original value, while fractional ownership properties tend to maintain or appreciate in value, on a level similar to regular homes.
9. Most (if not all) time share properties mandate that your visit must occur over consecutive days, whereas fractional ownership properties allow for multiple non-consecutive visits. Fractional owners can even exchange time periods with their co-owners.
10. Fractional owners have the option of renting their vacation home to others when they are not using it, which can generate rental income that can be used to offset ownership expenses. In Surfside's case, Bluefin Bay's award-winning management team operates the rental management program at Surfside.
11. Fractional owners are able to allow family and friends to stay when it’s their time to occupy the property.
12. Fractional owners can leave their fractional ownership interest to their heirs.
13. Fractional owners can facilitate the purchase and/or sale of a fractional ownership interest by way of a 1031 Tax Deferred Exchange.

Most wouldn't choose to end on number 13, but it's my lucky number :-) Please feel free to contact me if you would like to learn more about fractional ownership opportunities at Surfside to determine whether it's something that would fit your lifestyle. I can be reached by phone at 218/663-6886 or via email: ryan@surfsideonsuperior.com.

posted by Ryan Anderson at 3:45 PM
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