Fractional ownership is a method in which several unrelated parties can share in, and mitigate the risk of, ownership of a high-value tangible asset, usually a jet, yacht or piece of resort real estate. It can be done for strictly monetary reasons, but typically there is some amount of personal access involved. One of the main motivators for a fractional purchase is the ability to share the costs of maintaining an asset that will not be used full-time by one owner.

Every fractional endeavour requires some sort of management, to administer the rules and regulations (which are agreed upon before the fraction is purchased) and maintain the asset to the degree laid out in the ownership documents. Generally, management will oversee the daily operation of more than one property, although it is not necessary. A single fractional asset may be managed by a single entity.

Each owner is guaranteed a prescribed amount of access to the asset, which typically can be used or offered to the public as rental or charter, the income is usually split between the management company and the fractional owner, unless the owner finds the renter himself. Additionally, each owner pays a portion of the annual management fees and maintenance, relative to the percent of ownership.

In business, fractional ownership is a percentage share of an expensive asset. Shares are sold to individual owners. Typically, a company manages the asset on behalf of the owners, who pay monthly/annual fees for the management plus variable (e.g., per-hour, per-day) use fees. For rapidly depreciating assets, the management company may sell the asset and distribute the proceeds back to the owners, who can then claim a capital loss and optionally purchase a fraction of a new asset.

Fractional ownership offers an individual or company the option to purchase a share of an aircraft. Shares from as little as 1/16 of an aircraft, which offers approximately 37.5 hours of flight time per year, to 1/2 of an aircraft can be purchased, depending on the needs of the operator. The most common amounts purchased usually range from about 1/8 to 1/4 (75 to 150 flight hours per year) of an aircraft. Though the owner takes title of the portion of their investment, they are not assigned to a dedicated aircraft for usage.

Instead, they are given access to a pool of similar aircraft, and therefore, theoretically, an owner may never actually fly on their titled jet.

Co-owners (referred to as 'owners') of a fractional program's aircraft are required to pay a percentage of the aircraft's purchase price that is proportionate to the number of hours they wish to fly per year, for the duration of their contract—typically 5 years. In addition to the price, there are fees charged for all occupied flight hours (that fluctuate with changes in fuel prices), as well as monthly fixed-management fees that cover maintenance and administration of the program.

In return, the customer receives a predetermined number of hours in the aircraft of their choice, based on the owner's needs and the amount they are willing to pay. Fractional owners are guaranteed that this aircraft, or another aircraft of the same model or comparable aircraft type, will be available 24 hours a day, 365 days per year, with as little as four hours' notice. In addition, the management company provides all scheduling, flight planning, staffing, catering, maintenance, communications, and insurance services.

A fractional owner simply picks up the phone, calls a dispatcher, requests a flight, and drives to the airport.

The term fractional ownership originally became popular for business jets. Richard Santulli of NetJets pioneered the concept of allowing businesses to purchase shares in a jet to reduce costs. With a fractional jet plan, members will typically fly in any jet available, not necessarily the one in which they own shares. The management company will reposition jets as necessary and provide flight crews. Companies with greater needs purchase larger shares to get access to more time.

The fractional ownership concept has since been extended to smaller aircraft and now has become common for single-engine piston aircraft like the Cirrus SR22, which are beyond the financial means of many private pilots. The same concepts apply, except that the management company may not provide flight crews nor reposition the aircraft.

Many pilots get together to buy light aircraft in a privately bought and managed fractional ownership, this is often known as group flying.

Fractional ownership simply means the division of any asset into portions or shares. If the "asset" is a property, the title or deed can be legally divided into shares. In certain instances this is done by creating a "mezzanine structure", i.e., creating a company which owns the property then allowing multiple owners or investors to own shares in the company. Those shares can then be purchased and owned by more than one individual. The reasons for a "mezzanine structure" can vary.

Two common reasons are to allow transfer of shares without the need to reflect changes on the title or deed to the property, and for tax benefits.

Another type of fractional ownership, not part of a securitized business plan is Tenancy in Common, which is grounded in the real property laws of most, if not all states. The main difference is there is no right of survivorship to the sponsor or other owners if one or more of owners were to pass away. Where there are similarities with the equal sharing of operational expenses, rental income and access, the striking difference is free transferability of the owner's interest in the property without regard to the other owners in the property.

Shared ownership of the property and its deed will also entitle shareholders to certain usage rights, usually in the form of weeks. Conceptually, fractional ownership is not the same as timeshare. Fractional ownership affords much of the freedom and usage benefits offered in timeshare; however, the fundamental difference with fractional ownership is that the purchaser owns part of the title (as opposed to units of "time"). Therefore, if the property appreciates (or depreciates) in value, then so do the shares.

As with whole ownership, fractional owners can sell whenever they deem necessary or prudent, releasing the capital growth from their "bricks & mortar" investment.

The practice of joining together with family and friends to share ownership of vacation property has been around for many years. But the fractional property industry started in the U.S. in the Rocky Mountains ski resorts in the early 1990s. These first fractional developments recognized that people did not want to buy whole homes, which they would use only for a few weeks a year in the mountains. According to research firm Ragatz Associates, there were over 312 fractional developments in North America in 2017. The U.S.

Mountain region has the majority of active fractional property available, with the U.S. Pacific region next. The prevalent leisure activity for owners of fractional property in the U.S. Mountain region is skiing. In 2018, the most common fractional size available for purchase in North America is a one-fourth ownership, giving owners three months of total annual visit usage.

Outside the USA a non-commercial form of fractional ownership has been in existence for several decades. In this form, otherwise unconnected individuals (rather than family or friends) form private syndicates to purchase, for example, vacation property or boats. These syndicates operate as private member groups with small numbers on a non-profit basis, generally just sharing expenses and usage.

These groups can involve assets ranging from modest apartments or condominium-type properties to multimillion euro/dollar properties, and leverage their ability to make collective purchases of additional assets such as boats or vehicles as additional facilities while retaining control entirely within the membership of the group.

The popularity of the term fractional ownership has caused extensive rebranding in other industries where similar concepts, such as real estate timeshares, were already well established. The main distinction between timeshare and fractional ownership is that a timeshare is a right to use, but with fractional ownership is a deeded piece of real estate, just not for the entire parcel.