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| There seems to be a difference of opinion between fractional ownership schemes on whether unused weeks can be rented out or not. What is PPAT's stand on this? |
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There are several theories on the legality of rentals of fractional ownership properties, according to two of the leading attorney's on the matter. Andy Sirkin, prominent San Francisco attorney and Sam Okoshken, well known American attorney who has been living and practicing in Paris for over 20 years. I will direct you to the attachment that was authored by Andy Sirkin on "Taxation of Fractional Vacation Ownership in France owned by non-French resident". Executive Summary on page 3 of 13 in the second paragraph outlines Andy's conclusion. He states:
If the fractional French property is used for vacation rentals, even occasionally, certain fractional ownership structures may trigger “commercial” characterization. Unfortunately, the only structure under which vacation rental will not risk “commercial” characterization is direct deeded ownership, and the enforcement/foreclosure and transferability problems associated with direct deeded ownership outweigh any potential tax advantages. The potential adverse tax consequences of allowing rental within more practical fractional ownership structures may be less likely if rental by the ownership association or company is prohibited, and rent pooling is avoided in favor of individual rentals by the fractional interest owners. But the only way to definitively eliminate the problem is to prohibit all rentals. In the end, purchasers of fractional interest must weight the economic benefits of rental income potential against the possible adverse tax consequences of “commercial” characterization and, based upon the outcome of this analysis, choose between projects that allow rental and projects that do not.
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