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What Is Ownership Interest?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 14 August 2014
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    Conjecture Corporation
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Ownership interest is a term that is used to describe the range of rights and responsibilities that come along with the acquisition of some type of property. Often used as a means of identifying property rights and commitments connected with the ownership of a piece of real estate, ownership interests addresses the rights of the owner to retain, manage, sell and event donate the property if so desired. Typically, ownership interest also addresses the owner’s responsibility in terms of upkeep of the property and honoring any tax debts that are assessed on the real estate, based on how much ownership is invested in that property.

At the core of ownership interest is the ability of the owner or owners to make use of the holding as they see fit. This means that as long as the activities that are conducted on the property are in compliance with local regulations, the owners are free to use the property in any way they like. This includes using the real estate as a private residence, as a place of business, or a combination of the two. Owners may also choose to lease or rent the property to a third party, effectively using the asset as a means of creating an income stream. Should the owners desire, ownership also provides the ability to donate the property to a charitable organization or even give the real estate to another individual, subject to any limitations imposed by local laws.

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Along with the benefits that are included in ownership interest, there are also responsibilities that owners assume. This in many cases committing to upkeep of the property that is at least in compliance with the minimum standards set in place by local jurisdictions. In addition, owners must pay any capital gains taxes, property taxes, and any other obligations that result from the ownership and use of the property. Failure to do so could lead to seizure of the property by the local jurisdiction, with ownership interest terminated at the time the property is seized and eventually sold to a new owner.

Ownership interest may be held by an individual or an entity such as a company or non-profit organization. In some cases, the interest may be shared by multiple entities. For example, three individuals may choose to purchase a vacation home together, with each one holding ownership interest that is in line with the amount of investment they made in the acquisition. With this arrangement, all the owners share in proportion to their investment both the benefits and the responsibilities associated with the arrangement.

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