fractional ownership

Method of sharing the ownership of an asset that would be unobtainable by an individual. Shares of the asset are sold to individual owners and each owner will be allowed the privileges of access to the asset and share in any resulting income. The asset in a fractional ownership scenario is generally managed by a neutral party for the benefit of the owners. In the event the asset begins to depreciate in value, the management company may have the option of selling the assets and dividing up any proceeds amongst the owners. If there is any loss in the sale owners may be able to claim a capital loss. Vacation homes are an example.