How Does Fractional Ownership Work in Canada?

Curious about this type of real estate ownership? We answer all of your questions and more.

By Emily Southey | 9 minute read

Nov 30

Keep reading to discover just how fractional ownership for real estate properties works in Canada! 

What Is Fractional Ownership in Canada?

Fractional ownership is a form of collaborative real estate ownership in Canada where the overall cost of a property is split up among a group of owners. Most often, a property is divided into several shares, and each purchaser buys one or more shares. In exchange for their one-time purchase, they receive fractional ownership in both the building and the land. Beyond the one-time expense of purchasing shares, each purchaser is typically also obligated to pay an ongoing maintenance fee. It’s also worth noting that in fractional ownership, each owner has title, which gives them free rein to sell their shares on the open market or hold onto them and pass them down to future generations. Owners can profit off their fractional ownership if the property appreciates in value, as the value of the property is directly tied to the value of each owner’s shares. While fractional ownership is an ownership structure that can be applied to all kinds of expensive assets, it is most commonly used in real estate, especially for vacation homes. Fractional ownership in real estate is often arranged through the property management company that oversees the maintenance of the home.


Fractional Ownership Versus Time-Sharing

Before we explain how fractional ownership works, we want to clarify the differences between fractional ownership and time-sharing. Time-sharing has some similarities with fractional ownership and the two terms are sometimes used interchangeably, but they are not the same. Time-sharing also involves a group of people sharing the use of a property, however, the details of the arrangement are distinct. In time-sharing, an investor enters into a lease agreement for a set period (usually an extended period, such as 50 years). The investor does not receive an ownership interest. Instead, they own units of time rather than part of the title, as one has with fractional ownership. With time-sharing, the investor earns the right to occupy the property at certain times. Similar to fractional ownership, each investor pays an ongoing maintenance fee to the property management company, on top of the fee associated with the lease. 


How Fractional Real Estate Investing Works

Fractional ownership works as follows: An investor owns a share of a property and is issued a deed for that property (not a specific time that they can use the home, as with time-sharing). This keeps the costs minimal for each investor while still giving them access to the home. 


In the case of fractional ownership, each investor enters into an ownership agreement in which they agree to share both the costs and the benefits associated with property ownership. These costs often include everything from general upkeep and repairs to property management fees, while the benefits may include personal use, profits from any future resale, and equity.


The terms of each fractional ownership agreement often vary but typically, owners hire a property management company to handle the maintenance of the property, as well as the scheduling of when each owner has access to the property. 


Investors choose to enter fractional ownership agreements for several reasons. Some may be interested in owning a second home but do not want to spend the money required for whole ownership. Other times, investors choose to enter into agreements that give them access to a network of communally owned properties, such as condo hotels or vacation clubs. This type of fractional ownership setup is known as a private residence club. 


Depending on the terms of the agreement, part owners can often transfer their usage rights to friends or family members. They may even be able to rent them out to other part owners. The size of a co-owner’s fractional interest usually determines how much time they can spend at the property and how much of a say they have when it comes to group decisions about the property.

“Fractional ownership is a form of collaborative real estate ownership in Canada where the overall cost of a property is split up among a group of owners. Most often, a property is divided into several shares, and each purchaser buys one or more shares.”

Key Considerations Before Entering Into a Fractional Ownership Agreement

If you are thinking about entering into a fractional ownership agreement, considering the following factors can help you decide if it is right for you.



One of the most important factors in any real estate investment is cost. To identify the upfront costs and estimate future costs, read the terms of the agreement carefully. Make sure you have a clear idea of how much each share costs and calculate the total cost based on the number of shares you wish to purchase. From there, review the maintenance fees and remember to account for the taxes charged on these fees (maintenance fees are subject to HST/GST in Canada). You should also review the agreement for any additional fees mentioned. For example, some fractional ownership agreements charge an additional fee to swap properties, if swapping is even allowed. Further, since fractional ownership gives each investor a legal ownership interest, each purchaser is required to pay land transfer taxes in their province. 

Some costs may not be obvious when first reading the agreement. For instance, some agreements stipulate an additional fee to swap properties if swapping is allowed. Also, the ongoing maintenance fee is subject to HST/GST if the property is in Canada.


Local laws

All real estate deals are governed by the law in the jurisdiction in which the property is located. So if you’re buying a property through fractional ownership in Canada, make sure to research local laws in your province. For example, Ontario’s Consumer Protection Act mandates a 10-day cooling-off period, in which a purchaser can cancel the agreement without reason. The Act also gives the purchaser the right to cancel the agreement within one year if they have yet to receive a copy of the agreement. To ensure you are aware of and understand the relevant legislation in your province or territory, we recommend consulting with a real estate lawyer. 


Real estate market

If you are entering into a fractional ownership agreement for investment purposes, then the potential for growth will be an important factor. To determine this, research the local real estate market to ensure the property is in a good location and is likely to appreciate in value. A realtor can help you do a comparative market analysis and provide insight into the trajectory of the market. 


Contractual rights

Contractual rights are another key consideration before entering into a fractional ownership agreement. There are a few terms that often pop up in fractional ownership agreements that investors must be aware of before committing. We recommend discussing these terms with a real estate attorney. 


  • Reselling: What are the terms associated with property resale or with an investor selling their shares in the property? 
  • Property management fees: Does the investor have any control over the property management fee? Can this fee be increased unilaterally by the property management company?
  • Renting the property to third parties: Can the investor rent out their assigned time period either on their own or through the management company? Are there any fees associated with renting it out or any restrictions on who the property can be rented to (for example, family members only)?

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Tax ramifications

One final consideration of fractional ownership is the tax ramifications. In Canada, fractional ownership purchases that are later sold at a profit are taxed as a capital gain. In most cases, a property owned through fractional ownership will not qualify as a principal residence for any one party, which means the investor would not qualify for a capital gains exemption. Beyond the tax owed upon selling, any income earned from renting out the property to a third party is also taxable at the investor’s marginal tax rate. If you live in Canada but your timeshare is located outside of Canada or vice versa, you may wish to seek the help of a certified accountant or tax adviser who specializes in such international real estate transactions.


The Pros and Cons of Fractional Ownership

Fractional ownership has benefits and drawbacks, both of which are outlined below.


Pro: It’s affordable

One of the biggest perks of fractional ownership is that it makes real estate investing more affordable. It makes it possible to share ownership of an expensive property you would not have otherwise been able to afford. Ultimately, fractional ownership allows investors to gain access to a home in a desirable location at a price they can afford. It becomes even more affordable when you consider that ongoing maintenance is shared by all parties. 


Pro: Peace of mind

Another pro of fractional ownership is that investors can have peace of mind knowing that the burden of home ownership is shared among them. With an entire group of people left accountable, it can ease the stress that comes with owning a home, such as property maintenance or checking in on the home when it is vacant. 


Con: It can be difficult to sell

Selling a property through fractional ownership is often more difficult than selling a property through whole ownership. Ample research will be required to find out how ownership is structured and what restrictions apply when it comes to selling shares. 


Con: You’re tied to one location

Another con of fractional ownership is that it ties the investor to one property in one location. If you or your family purchase a fractional share for vacation purposes, this arrangement can be limiting as you may be forced to spend many of your vacations in the same place. 


Con: Restrictions

One last drawback of fractional ownership is that ownership may be subject to all kinds of restrictions. Whether you want to sell your shares or temporarily rent the property to a third party, doing so may be complicated owing to the terms of the agreement. 

Frequently Asked Questions

Does fractional ownership mean you have to pay repair costs of properties as well?

Fractional owners typically must pay ongoing maintenance fees to the property management company that manages the home. These fees are intended to cover all necessary maintenance, including repairs, as well as administrative tasks, such as scheduling each owner’s time in the home. All costs are split proportionally among investors. 

What is the average percentage of a home that can be owned with fractional ownership?

The percentage of a home owned through fractional ownership varies. Investors usually have the opportunity to purchase just one share or multiple shares in a property. The number of shares they have is often proportional to the amount of time they can use the property. An investor with a greater number of shares may also have more decision-making power regarding the property. 

Is the home-purchasing process the same with fractional ownership compared to the typical home-purchasing process?

The home-purchasing process with fractional ownership often works like this: A fractional ownership company purchases a property and creates a new corporation that owns the property. Investors can then purchase shares in the newly created corporation, which in turn, gives them a “fractional share” of ownership in the property. Companies can stipulate certain terms, such as the minimum investment requirement or the maximum number of investors.

Emily Southey

Wahi Writer