Real Estate: What is Fractional Ownership, how is it different from REIT and in which one gets more benefits?

Roger Pettingell Sarasota Real Estate



The commercial real estate market is projected to grow by 16% in the coming years.
Fractional ownership helps an individual to invest with a very small amount.
Fractional ownership generally invests for 5 to 10 years.

New Delhi. Investing in this is always considered beneficial, considering the rising prices of land and property. But, most people withdraw when more capital is needed for this. The solution to this problem is fractional ownership, which is increasing rapidly in the country these days.

According to an estimate, the commercial real estate market is expected to grow by 16% in the coming years. In such a situation, fractional ownership will also increase rapidly, as it reduces the financial burden on the single investor or property owner. Not only does this open up new avenues for investors, but it also reduces costs. Through this new mode, you can become the owner of the most expensive property.

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Importance of Fractional Ownership
Considering the huge investment, it is not possible for everyone to buy a property. Fractional ownership helps an individual to invest with a very small amount and get returns equal to the amount invested when the value of the property increases. However, this requires that everyone involved in the pool of fractional ownership is fully aware of this and also has complete legal title documents on their part.

Fractional Ownership in Commercial Property
Considering the rising prices of commercial properties, it is not possible for a middle class person to buy these properties. But, with the help of fractional investment, middle class people can also earn profits by buying commercial properties like HNIs and Ultra HNIs.

Difference between Fractional Ownership and REIT
Don’t get confused about the similarities between these two. Fractional ownership gives complete freedom to investors to choose the type of asset and investors in REITs do not have any freedom as it is decided by the company managing the fund. However, investors investing in REITs can sell their units and exit whenever they want, whereas fractional ownership is a long-term investment with a stipulated holding period, which is generally 5 to 10 years.

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what is the tax law
REITs are regulated by SEBI and have well-defined norms including professional management with core skills. You also get tax exemption on this as per the rules of income tax. At the same time, you are not given tax exemption in case of fractional ownership. Therefore, after assessing your capability and investment method, choose either Fractional Ownership or REIT.

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