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OWNERSHIP & ENTITIES

Fractional interest

Also called: fractional ownership · co-ownership share

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PLAIN-ENGLISH DEFINITION

An ownership interest representing less than 100% of a property or investment.

What it means in practice.

Fractional real-estate interests can be structured in different ways, including direct TIC ownership and securities-based arrangements. The tax and securities treatment depends on the structure.

Why it matters.

“Fractional” describes size of ownership, not the legal form.

Additional notes.

Fractional real-estate interests can be structured in different ways, including direct TIC ownership and securities-based arrangements. The tax and securities treatment depends on the structure.

PRIMARY / REFERENCE SOURCES

Read the source material.

irs.gov ↗irs.gov/publications/p544
CONNECTED LANGUAGE

Related definitions.

Ownership & EntitiesTenancy in commonA form of direct co-ownership in which each owner holds an undivided interest in property.Ownership & EntitiesDSTCommon shorthand for Delaware Statutory Trust, a legal trust structure often used in securitized fractional real-estate offerings.
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