The concept

Finance & legal

The 21-5 concept might seem simple, but below the surface it's quite complicated. We've done extensive work ensuring that we operate within a sold legal and financial framework, providing our families, and us, peace-of-mind. Here are some of the key subjects.


The vacation homes are located in several different areas of Canada and the US. This diversification helps to protect their combined value against any local real estate downturn - as opposed to buying a single property in one location, where your value would be 100% dependant on that locations real estate market.

In short, a 21-5 ownership share is less vulnerable to any local real estate fluctuations than owning a single vacation home in a given market. 

Further more, the operational costs are based on the local price levels and therefore also diversified over the five locations. 

Based on our extensive experience, we have developed budgets for the monthly operational costs for the owner associations and accordingly provides our owners/families with financial transparency and predictability. 

The monthly maintenance fees include, among other things:

  • Insurance
  • Property taxes
  • Property maintenance
  • Any strata/HOA maintenance fees
  • Administration
  • Accounting
  • Owner association coordination and support

Utilities (water, electricity and heating) and professional cleaning are covered by the individual family after each stay.

Every owner/family deposits one years worth of maintenance fees to their owner association's bank account. This way, all owners are protected should one owner not pay their monthly maintenance fees. 

If the owner association decides to upgrade and/or renovate one or more of their five vacation homes, this has to be approved at the annual general meeting. No projects are initiated until the funds have been raised. 

If major repairs are needed, but not covered by the owner association's contingency fund or insurance, the owners/families will equally pay 1/21 of the costs - which is obviously significantly less costly than being the sole owner of a property in need of repairs. Another advantage of co-ownership.


The 21-5 owner associations are very well regulated with a thorough contractual framework specifically developed with Canadian laws and tax code in mind. 

The legal structure for our owner associations has been developed in cooperation with expert lawyers and accountants in both Canada and the US.

The ownership structure is a Limited Partnership (LP) consisting of the 21 individual and equal owners/families.

As an example of the rules and regulation is, for instance, should a family not pay their monthly maintenance fees, the other members of the owner association can decide to expel that family from their association. In that case, the non-paying family must sell their ownership share. If that does not happen, 21-5 will take legal action to do so.

This might sound harsh, but for 21-5 it is more important to protect the association from bad creditors, including a non-paying member of a 21-5 owner association, than protect an individual owner/family with financial troubles. Having said that, we will obviously do our utmost to help an owner in distress to sell their ownership share at the best possible price. But the best interests of the co-ownership has our primary focus.

The 21 families are the legal owners of the five vacation properties

It is the 21 families, and nobody else, who own the five vacation homes. As a member of a 21-5 owner association you therefore become a 1/21 co-owner in the specific five properties. 

Right of first refusal

When we assemble an owner association, we meet with all prospective families to ensure the right fit. This approach began in Denmark where it’s called a “coffee meeting”, but in fact it’s more a vetting opportunity benefiting both parties. In case of a resale of an ownership share, we do not go through the same interview process with the potential buyer. However, the other 20 families in the specific owner association, where an ownership share is up for sale, will have first right of refusal to the ownership share at minimum the same price offered by any third party. This serves to protect the best interest of the owner association.

In relations to an estate sale, where either the spouse or children are the beneficiaries, the right of first refusal is not executed.

Read more about finance and legal in the following sections.


Property tax

Local property taxes for the 5 vacation properties are included in the budget for the monthly maintenance fee.


Tax on usage/enjoyment

Because the vacation properties are held in a partnership structure, the personal and non-rental use of the properties are deemed not to result in any income inclusion to the owners for Canadian or US federal income tax purposes.


Tax on sale. Capital gains tax

While we do not think of the ownership shares in a 21-5 Limited Partnership as investments, an owners’ share in a 21-5 LP is an asset that can be sold or transferred.

Should an owner choose to sell his or her ownership share in a 21-5 LP, and the proceeds exceed the owner’s total costs at the time of the sale, the owner will realize a capital gain which will be taxable in Canada. As well, because a portion of the properties held by the 21-5 LP will be US properties, a portion of the capital gain will also be taxable in the US.


Bequeath or gift tax

Should an owner wish to bequeath his or her ownership share in a 21-5 LP to another person, for Canadian income tax purposes, the owner will generally be deemed to have disposed of the interest for proceeds of disposition equal to the full fair market value of the interest at the time of the owner’s passing. The Canadian capital gain will then follow based on the deemed proceeds of disposition. For US purposes, US gift tax may apply.


Estate tax

Because any estate tax implications relate only to the individual 21-5 owner and not the owner association itself, we always advice the owner/beneficiaries to consult with their own estate tax experts.

21-5 has the experience and knowledge to help our 21-5 owners/families regarding any tax questions related to their owner association, but we also recommend our potential and existing 21-5 owners to consult with their own lawyer and/or accounting resources in relation to their 21-5 ownership share.

Corporate ownership

The 21-5 concept revolves around families sharing vacation homes. However the ownership can be held by a corporate entity, i.e. a holding company, as long as the homes are not used for corporate purposes, and are only to be enjoyed by the owner of the company, plus family and friends, and of course the co-owners in the owner association.


The personal use of the 21-5 properties by a corporate shareholder, or their family, could be deemed a taxable benefit by the Canada Revenue Agency. Such CRA assessment is not deemed to have any spill-over effect to the owner association itself, nor the other co-owners/families in the association.


Short term

The experience so far has been that the value of a 21-5 ownership share appreciates as soon as we’ve purchased and renovated a home. Both because of a general market appreciation in the locations we pick, but also because of the value we add to the properties through the renovations we do.

The average appreciation for the families who over the years have sold their 21-5 ownership share has been around 50%.

Such appreciation is obviously not guaranteed going forward, but it's been a reflection of well-kept and attractive vacation properties in desirable locations, well-managed owner associations, and a general positive market development.

Long term

In general, real estate tends to appreciate over time. The graph below shows the market appreciation in Canada and the US over the last quarter century.

Even though the long-term picture is positive, we’ve also seen some significant downturns to. It’s all about timing, the window between buying and selling.

21-5 only purchase real estate in prime locations, in stable and safe regions and countries, where vacation property values have shown to perform a lot better than the average market.

House Pricing Development


Financial requirements

The owner association will be assembled with Canadian families investing cash in their personal capacities or through a holding corporation. The 21 families will form a British Columbia limited partnership which will be operated on the principles of transparency, trust, and a comprehensive legal framework.

Because we operate under the national and provincial securities regulations, there are certain financial requirements which our families will have to fulfill. This further ensures that our owner associations are operating on solid financial and legal ground and can withstand any future market fluctuations.

The financial requirements will be those available under applicable securities laws, such as:

  • an individual who, either alone or with a spouse, beneficially owns financial assets having an aggregate realizable value that, before taxes but net of any related liabilities, exceeds $1,000,000; or
  • an individual who, either alone or with a spouse, has net assets of at least $5,000,000; or
  • an individual whose net income before taxes exceeded $200,000 in each of the 2 most recent calendar years or whose net income before taxes combined with that of a spouse exceeded $300,000 in each of the 2 most recent calendar years and who, in either case, reasonably expects to exceed that net income level in the current calendar year;
  • a corporation in respect of which all of the owners are individuals who fall in one or more of the above categories; or
  • a corporation that satisfies the ‘minimum exemption amount’, where applicable, under applicable securities laws.


Financial timeframe

When at least twelve families have signed the contractual framework, we will hold the inaugural general meeting, where everybody will get a chance to meet each other. All the participants will introduce themselves and the founding charter is signed. You are now officially a member of your owner association and the 21-5 team will begin the search and purchase of the vacation properties.


The investment, and a deposit of one year of maintenance fee, is due one to two weeks after the inaugural meeting, and the funds are placed in the owner association’s own bank account.

As the owner association adds new families, until reaching 21 families, each new family will transfer their buy-in funds to the association's bank account.

How does 21-5 generate its revenue?

Transparency is key at 21-5. We generate our revenue through two sources:

1. When we establish an owner association, we receive a percentage of the total funds raised. This gives us great flexibility to find the right properties and it also eliminates any need for a commission related to the purchase and sale of a property. In other words, we have no conflict of interest and only represent our 21-5 families. Our fee is included in the initial ownership share investment.

All our owner associations have generated more value for the 21-5 families than they invested when they joined their association. A win-win situation. We know this through the market evaluation and sales prices related to the resale of ownership shares. The tangible ownership share appreciation comes primarily from us finding the right vacation properties at the right price points, but also from the value we bring to the properties through the renovation we conduct before we hand over the homes to the 21-5 families.

2. When the purchase, renovation and interior design has been completed, the specific vacation home is handed over to its 21-5 owner association. At that point we start to receive an administation fee. Our administration fee is included in the monthly maintenance fee covering insurance, property tax, garbage disposal, ongoing maintenance, strata costs, landscaping, accounting and administration and more.

If a family, down the road, wishes to sell their 21-5 ownership share, we are also able to help with that and charge a fee for our services. You are more than welcome find a new family for your ownership share on your own, but it’s been our experience, that we are able to add additional value through our knowledge and network.

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Contact 21-5 and we will help you fulfill your vacation home dreams.


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