&Hamlet allows you to buy your dream vacation home at a fraction of the price by tailoring ownership to actual usage and co-owning the property with others. We offer vacation homes located in both Norway and Spain.
Co-owning vacation homes with others has a long tradition in Norway. It typically arises through inheritance when siblings inherit the cabin together or is set up and organized independently with friends. This is a way Norwegians have organized co-ownership of vacation homes for generations. Ownership in a &Hamlet vacation home is organized in exactly the same way, but we have systematized shared ownership and removed the potential challenges that arise when organizing co-ownership of a cabin on your own.
Ownership works in a way that you buy an ideal share (1/8) of the vacation home by paying 1/8 of the purchase price and expenses and have the right to use the entire vacation home for a certain number of days a year. &Hamlet eliminates potential pitfalls of co-ownership by functioning as an administrator and facilitator. This means that we ensure a fair allocation of the use of the vacation home through our proprietary reservation system, and we take care of maintenance and other practical matters that come with owning a vacation property. This way, co-owners do not need to interact with each other unless they want to. The operating agreement with &Hamlet can be terminated at any time, provided there is unanimity among the respective co-owners. This solution is intentional - &Hamlet must earn this role.
Ownership is further organized so that co-owners are liable pro rata to &Hamlet as a company. In practice, this means that as a co-owner, you are only responsible for your own financial obligations to &Hamlet. Therefore, you will not be affected if one of the co-owners defaults on their payment obligations. It is only allowed to take out loans with collateral in your ideal share. No joint liabilities are allowed. This way, as a co-owner, you have full security and predictability over your ownership in the property. Through our customized agreements, you get full predictability, and everything is coordinated through &Hamlet.
Ownership structure for vacation homes located in Norway
The agreements and ownership structure follow the legislation of the country where the property is located. Therefore, we always work together with local lawyers to ensure the owners' rights. In Norway, the ownership structure is organized as a regular property law co-ownership regulated, among other things, by the Co-Ownership Act. When the purchase is completed, you are registered as the owner of the property. You are then listed as the formal owner of the vacation property, with all the rights and obligations that any owner has for their vacation home. In addition, you have the rights and obligations as a co-owner of the vacation property, according to the Norwegian Co-Ownership Act.
Ownership structure for vacation homes located in Spain
Since properties located in Spain are subject to Spanish legislation, the ownership structure is organized slightly differently compared to Norway. Here, co-owners are organized in a Spanish limited liability company (SL) that owns the property. Limited liability means that the co-owners' liability is limited to the contributed share capital (in this case, the purchase price and expenses). Furthermore, you have better protection regarding transactions and resale through such an ownership model.
Sale of ownership share
Regardless of the ownership structure, co-owners are free to sell their ownership share whenever they wish. The sales process is almost the same as the ordinary sale of a vacation home. As a co-owner, you set the price for your ideal share, and you can use your preferred real estate agent or &Hamlet's marketplace to attract potential buyers. As the owner of an ideal share, any increase in value resulting from a higher market price will belong to you.
For ownership organized as regular property law co-ownership (in Norway), a document fee of 2.5% of the purchase price is incurred when purchasing the ownership share. In Spain, there are sales costs ranging from 12-14% for any property purchase, depending on the location in Spain and whether it is a new or used property. This is partly due to a VAT tax of 8-10% for used and new properties, respectively. These sales costs are always included in the price you see for a &Hamlet ownership share.
As an owner of a &Hamlet share, you share the operating expenses associated with owning any property and pay only according to your ownership share. You pay monthly, similar to common expenses you are obligated to pay in any co-ownership. Operating expenses are deducted from the accounts, so there will be no net gain to be taxed, and the ownership company (which owns the property in Spain) will not be affected by Spanish corporate tax. If you are tax resident in Norway, you will be subject to wealth taxation in Spain. However, if you have paid taxes in Spain, you may be entitled to a credit by providing documentation.
The tax consequences are the same whether you own an entire property or a share. The following provides a concise overview of taxation, assuming you are tax resident in Norway:
- Upon the sale of a property, any gain from the sale is subject to a 22% tax. The same applies to the sale of an ideal share in the property. However, there are exceptions from capital gains taxation if you meet the ownership and usage requirements in the Norwegian tax law § 9-3 (4).
- Losses from the sale of a share in a vacation property are deductible if any gain would have been subject to taxation.
- The ideal share is included in individuals' wealth tax basis. The property's assessed value is set at a maximum of 30% of the estimated market value.
- The "monster tax" proposed in Norway will not be relevant when owning one or more shares in an &Hamlet in Norway or Spain, as you can only own a maximum of 50% of the property.