Consider Fractional Ownership of a Vacation Home

By Jay MacDonald, bankrate.com | Published: 11/01/2007

If you prefer the latter, you're not alone.

A growing number of Americans are following the lead of well-heeled Europeans and investing in fractional ownership of vacation property. For the price of that Tuscan villa, you might own quarter shares in the four other destinations.

"That's exploding," says Andy Sirkin, attorney and partner in Sirkin Paul Associates of San Francisco and Paris, which specializes in fractional ownership. "Every week, we see a 10 to 20 percent increase in the number of calls."

As a fractional owner, you actually become a co-owner of a vacation property; you split the purchase price, maintenance and taxes with your co-owners, as well as the property's appreciation down the road.

The advantages of fractional ownership are numerous:

• Investment diversification. You don't have to bear the full financial burden of a holiday house you will likely only use a few weeks a year.
• Buying power. You may be able to buy a far more desirable property or in a better location than you could have afforded alone.
• Location. With a do-it-yourself fractional, you're not tied to properties on the tourist strip, and may opt instead to buy in a more desirable neighborhood.
• Culture cushion. Split the obstacles of setting up house in a foreign country among the group -- or better yet, buy into an already established fractional in your country of choice.
• Equity participation in the property's likely appreciation.
• Control over the ownership and maintenance.
• Business expense. You can reward employees, woo clients and write off part of your fractional if you use it for business.

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