Tax Deductions: Fractional real estate owners may be eligible to deduct expenses associated with their ownership share. This can include a portion of property taxes, mortgage interest, maintenance costs, and property management fees. Keep in mind that these deductions may be subject to limitations and should be in proportion to your ownership stake.

Depreciation Deductions: Real estate investors can typically deduct a portion of the property’s cost as depreciation expense over time. Fractional owners can claim depreciation deductions based on their ownership share, which can help reduce their taxable income.

Pass-Through Taxation: Many fractional real estate investments are structured as pass-through entities, such as LLCs (Limited Liability Companies) or partnerships. In these structures, the income and expenses from the property flow through to the individual owners, who report them on their personal tax returns. This can result in favorable tax treatment, as it avoids double taxation at both the entity and individual levels.

Passive Activity Losses: Depending on your involvement in managing the fractional real estate investment, you may be able to offset passive income from the property with passive losses from other investments.

Capital Gains Treatment: When you sell your fractional ownership stake in real estate, you may be eligible for capital gains treatment on any profit you make. Capital gains tax rates are often lower than ordinary income tax rates, which can result in tax savings when you sell your share. If you want to buy your share of our first home, reach out now!