Timeshares vs. Fractional Ownership

Guest Post

Sarah Scafford of International Listings offered to explain the differences between Timeshares and Fractional Ownership of vacation properties. Unfortunately real estate literature on the distinctions between the two seem biased depending upon whether one is selling timeshares or fractional ownerships. A simple bullet point list can be more clarifying than reading through pages of marketing or the Wikipedia definition.


Vacation homes are becoming increasingly popular, and not just with the rich and the famous. Thanks to timeshares and fractional ownership, it’s possible to own, and yet not own a home that you can use every year as a vacation retreat. Though both concepts are related to vacation ownership, there are basic differences between the two:

  • Timeshares typically last a matter of weeks while fractional ownership ranges for a few months. Some places allow time shares for even a single night; fractional ownership is a concept where the ownership of a resort is divided equally between the number of people who share the place.

  • Timeshares are owned by many other people besides you while fractional ownerships are shared by between 5 to 7 people who reside in the place at certain times of the year.

  • Timeshares do not transfer ownership while fractional ownerships provide ownership deeds to buyers.

  • Fractional ownerships are more costly than timeshares, with the initial cost, maintenance expenses and taxes adding up to much more than a similar timeshare option.

  • Fractional ownership places are usually more upscale and come with both conveniences and luxuries like spas, Jacuzzis and personalized services.

  • Fractional ownerships can be endorsed as alternative residences thus allowing for tax savings.

  • It’s easier to sell your share of a fractional ownership as they are more in demand.

  • In a timeshare, you have ownership of units of time at a particular resort while a fractional ownership grants you ownership over a part of the title to the resort.

  • When you resell them, timeshares depreciate and sell for hardly 25 percent of their original value while fractional ownerships appreciate on a level with regular homes.

  • Timeshares mandate that your stay is continuous whereas fractional ownerships allow fragmented visits. You can even trade time periods with your co-owners.

  • Fractional ownerships are allowed for luxury objects like yachts and jets and not just resorts.

  • You can rent your fractional ownership to others when you’re not using it.

  • You can allow family and friends to stay there when it’s your time to use the resort.

  • Your heirs can inherit your fractional ownership.

  • You can sell your share of a fractional ownership resort.

Some places which are in great demand and full all year through allow both timeshares and fractional ownerships. Timeshares or fractional ownerships, they’re ok if you’re using them as vacation property and not looking at them as investment options.

This article is contributed by Sarah Scrafford, who regularly writes on the topic of luxury homes for sale in Canada at International Listings. She invites your questions and writing job opportunities at her personal email address: [email protected].


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  • 7/29/2008 5:45 AM Arn Cenedella wrote:
    Hi Pat - thanks for an informative post. I own a fractional at Old Greenwood in Tahoe and just LOVE IT! I own 1/17 of a beautiful townhouse with attached garage overlooking the 18th hole. Northstar is 10 mintues away and Old Greenwood has a fabulous rec center with 2 pools, gym, bar, restaurant, and game room. I declare my fractional as a second home and deduct both interest and property taxes. I did not buy for investment though I am confident when I do sell (20 years from now?) I will get my investment returned. I purchased because I have none of the hassles of vacation property ownership while being able to enjoy three wonderful weeks a year in very comfortable upscale accomodations in wonderful Lake Tahoe and I get to golf and ski as well as just hang out.
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  • 7/29/2008 9:43 AM Chad Hallberg wrote:
    Sarah, I think you are missing one great thing...1031 exchange possibilities with fractionalized interest properties! If a fractinalized interest property is appreciating, then when you sell and look to go to another investment-type property, a person should take a good hard look at doing a 1031 exchange. Nothing in the Internal Revenue Code says this is not possible as the person owns an interest in the property, as you noted. I know of multiple people who make good money on their vacation properties when they sell out of them and go into another property doing a 1031 exchange. There are some hoops to jump through to make a 1031 exchange work with vacation properties, but it is still possible to do.
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  • 7/31/2008 6:14 PM Lake Place wrote:
    We sell vacation properties exclusively. Another popular trend is the "CIC" or Common Interest Community. In most cases, this is a former resort that has been rezoned and each individual unit is sold off as a condo.

    There is an association and management company to take care of the grounds and upkeep. When your unit is not being used, the management company will rent the property out with a large percentage of the proceeds going to you, the owner.

    This is a nice way to cover a lot of the expense that comes with owning a second or third home...and in our part of the country, it is much more popular than fractional ownership.
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  • 8/2/2008 12:03 PM Tony Sena wrote:
    Thanks for breaking down the differences. I have been hearing alot about fractional ownership lately and had been wondering how it was different than time shares.
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  • 8/7/2008 7:29 AM condo guru wrote:
    Very informative post. I know that fractional ownerships are becoming increasingly popular and I'm glad i know the difference!
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  • 11/18/2008 4:48 AM Ray wrote:
    Good intro. I was curious about your comment about it not being a reasonable investment. I just bought a hot five star five diamond fractional in Cabo San Lucas (not built yet) and they offered a lot of incentives that should make this investment climb in value in the coming years. Especially the free membership to a Jack Nicklaus Signature course on the property (Quivira). Don't you think that some of these special high end properties have potential to escalate in value? Again, we did it for the vacation and trading value inside Registry Collection.
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