Fractional Ownership Vacation Homes Utah

Fractional Ownership is becoming very popular in Utah and real estate. It can be described as shared ownership or partnership within a group for a property to be intended for vacation or resort-style homeownership. This way of owning allows for each buyer to have rights of use for a certain dedicated time and an equal share of value. The IRS has specific tax implications for fractional ownership arrangements. Generally, the group has a management and maintenance company that is hands-on with all matters, leaving all the co-owners relaxing at their second home.

The greatest factor of fractional ownership is the ease to enjoy a vacation home without the financial hardship of privately taking it on yourself, but unlike a timeshare, you have an asset.

There are many ways to create a group of buyers and users for ownership. This can be done by a Realtor, the seller themselves, or even Family and friends.

You can’t short-term rent fractional ownership homes, and they require that you own it for 6 months before you are allowed to sell it. A lot of cities especially in Utah and southern Utah are getting rid of the ability to short-term rent. 30 days +/- are the rental terms in St. George city. It’s a good idea to talk to the city about their short-term rental rules. Most fractional ownership is generally single-family homes because HOA’s have issues with fractional ownership.

When it comes to the financing options or requirements for fractional ownership, for lenders to qualify the home all buyers on the title must all be on the loan together for that to work. Otherwise, it must be a cash deal. The Fannie Mae lending guidelines have specific requirements for fractional ownership properties. Another way some lenders may finance your share is if it is under an LLC this way each owner owns part of the company.

The reason to buy fractional ownership versus a timeshare or the financial hardship of single owning a property is if the price is too high or the idea of a timeshare seems like a hassle for the amount you plan to use, then fractional ownership is the right choice for you.

Pros of fractional ownership

Shared cost of the home, fees, management, bills, and no short-term rental tax. You have the ability to own a luxury home at a fraction of the cost.

Cons of fractional ownership

No short-term renting is allowed; has to be single-family residences because many HOA’s don’t allow fractional ownership for condos and townhomes. Sometimes it may be tough to resell. Challenges may arise amongst owners on collaborating usage and timing.

For more information on Utah vacation properties, check out our articles on buying vacation rentals in St. George and vacation rental opportunities in Utah.