Finance, Legal & Tax

In 21-5 we have studied every aspect of financial, legal, and taxation consequences related to the 21-5 concept. We work only with U.S. advisors with proven reputations and industry specific experience in the country. No-one wants unpleasant surprises, and you can feel fully at ease, because we have done the preventive work.

Many of our owners are well versed in financial and legal matters, however, if you are not, we always recommend that you consult with you personal preferred advisory panel. We want you to have a complete peace of mind and address any concerns you might have.

We are always fully available to answer any questions from you or your advisors, although we don't provide tax advice.


The vacation homes are located in five different States of the US. Buying a single property in the same location makes you 100% dependent on the price development of that chosen area. A 21-5 vacation property share price is more stable compared to a single property, and adds an additional layer of security against local value fluctuations.

The fixed operational costs are anchored in the income and expense structure on each location, and as such aligned with the actual levels.

Based many on years of experience, we have developed budgets for the monthly operational costs for the owner associations and accordingly provide our owners with financial transparency and predictability. Again, we apply and constantly update our knowledge to diminish the risk of any unpleasant surprises.

The monthly association fees include, among other things:

  • Insurance
  • Local property taxes
  • Property maintenance
  • Strata/HOA maintenance fees if applicable
  • Administration (legal or finance representation)
  • Accounting (21-5 full accounting administration of the association)
  • Owner association coordination and support
  • 21-5 fee

Only other expenses you will need to provision for are utilities (water, electricity and heating) and a professional cleaning which billed to the respective owner after each stay. We have found that this is the best and most fair way to distribute such expenses, and is a streamlined system and fully transparent. The association is billed the actual cost from utility companies and partners - no additional margin added by 21-5.

The monthly association fee does not cover expending a roof replacement in 35 years, and so forth. However, when it comes to larger maintenance items any home is exposed to over a lifetime, 21-5 offers each association to have maintenance professional plans built, enabling it to build a savings fund.

Every owner deposits 12 months worth of maintenance fees to the association's bank account. In this way, the association is protected if someone defaults on the monthly association fee. 

If the owner association decides to upgrade or renovate one or more of the 5 vacation homes, this has to be approved at the annual general meeting. No projects are started until the agreed funds have been deposited in the association bank account by the owners.

All the properties are fully insured, but an extraordinary and unforeseen expense can occur when you own property. Most people who have owned property have had this experience at some point. In the event this occurs, it provides peace of mind that you will be 21 owners to share the burden and that it is not all on you.

U.S. Owner

In the United States, accredited investors, individuals, couples, an LLC, or a family trust with a designated representative who is a citizen of the U.S. or treated as a resident of the U.S., can participate in the 21-5 Association.


The 21-5 owner associations are tightly regulated. One of the key features with 21-5 associations is that there is no financing. That diminishes the risk greatly and provides stability to the model.

The clearly written regulations of the association, do for instance enable owners to exclude an owner failing to consistently pay the monthly association fee. Should this ever occur, the excluded owner has the obligation to sell their vacation property share, and should they not take the necessary steps to sell, 21-5 will do it on their behalf.

This might sound strict, but particularly for 21-5, priority is to protect the association against an incapable payer, including a non-paying 21-5 owner, member of 21-5 owner association, over an individual owner with temporary or lasting 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-owned association has our primary focus.

The 21 owners are the legal owners of the 5 vacation properties

It is the 21 owners, and nobody else, who own the 5 vacation homes.

The Association is organized as a limited liability company under the laws of the State of Delaware (DE LLC). This is the optimum way to organize the ownership, and in the event of a resale of a vacation property share, the administration and associated costs are relatively limited.

As an owner in a 21-5 association, you will legally own 1/21 of each of the 5 properties.

Majority Decisions

All ordinary decisions are made based on simple majority, whereas significant resolutions demand a 2/3 majority. We have found that this approach provides a stronger agility in the association, and dismantles the ability of anyone blocking sensible decisions for the association.

Joining a 21-5 association

Prior to inaugurating an association, 21-5 meets with all the prospective owners to ensure a reciprocal fit. The approach began in Denmark where it is referred to as a "coffee meeting." This meeting is more a vetting opportunity for both parties. When handling a resale of a 21-5 vacation property share, we do not go through the same process with a potential buyer. However, the 20 families in the respective association do have "right of first refusal" to the ownership share at minimum the same share price offered by a new potential owner. Again, a rule which serves to protect the best interest of the association. 


Each family and situation is unique when it comes to inheritance. 21-5 consults individually with each owner to the extent possible concerning inheritance. Often with participation of the owner's outside council.

In the event of an estate sale where the spouse or children are the beneficiaries, the registered representative is transferred, and the right of first refusal is not executed.


Tax advice is an individual matter

You cannot rely upon any advice contained on this website for the purpose of avoiding United States federal tax penalties. The tax information contained on this website was written to support the promotion or marketing of the transactions or matters described on this website. Each prospective owner is urged to consult its tax advisor in order to understand fully the Federal, State, Local and foreign tax consequences of an investment in an association in its particular situation.

Income tax

The Association is organized as a limited liability company under the laws of the State of Delaware (DE LLC). As a partnership, the Association will not be subject to federal income tax. Rather, separately, each owner will be required to take into account his/her's federal income tax return computing each year. Annually, and in due time, 21-5 will provide a K-1 schedule (IRS tax form) and a financial statement to each owner. From here on, the 21-5 owner conveniently has all the information needed to plan taxes with his/her's professional tax and or legal advisors.


Local property taxes

Local property taxes for each of the 5 homes are included in the monthly association fee. All of the 5 properties in the 21-5 U.S. associations are located in the United States.

Capital Gain Tax

An owner that sells or otherwise disposes of a Unit in a taxable transaction generally will recognize gain or loss equal to the difference, between the adjusted basis of the Unit and the amount realized from the sale or disposition. The amount realized will include the U.S. Owner Member’s share of the Association’s liabilities outstanding at the time of the sale or disposition. If the owner holds the Unit as a capital asset, gain or loss will generally be treated as capital gain or loss to the extent a sale of assets by an association would qualify for such treatment and the gain or loss will generally be long-term capital gain or loss if the owner has held the Unit for more than one year on the date of such sale or disposition; provided that a contribution by the owner within the one-year period ending on such date will cause part of such gain or loss to be short term.




How will the value of a 21-5 vacation property share develop over time?

Most people when they buy real estate - primary or vacation property, near or far away - prioritize whether the home will meet their needs.

Most important is therefore the utility, and the extent to which the best possible base is available for the family's future holidays. However, the investment aspect cannot be neglected when people buy property.

We have not designed the 21-5 associations with an investment perspective. On the other hand it is comforting to have a sense of whether the 21-5 vacation property share can be sold, without losing money.

In 2016, we executed the first re-sale and we have since then continued to facilitate re-sales of owner's shares. Some people go through divorce, illness or some other life changing circumstances. Interestingly, many of the re-sales we have made are for families who have wanted to acquire a larger or a smaller association and as such stay with the 21-5 community. In our experience, the general interest is significant and constant for the re-sale opportunities. The turnover rate has been quick and timeline short.

The average value appreciation for the resold association shares has surpassed  50%, and the average ownership period for selling owners has been about 3.5 years.

21-5 has proven itself as a good investment on the short term

We can observe already at this point that a vacation property share increase in value already during the first year. That is from the time of inauguration of the association and you make your deposit, until all of the 5 homes are in use. In our observation, most important for the value acceleration is the significant demand for already established associations as opposed to the demand for new associations which must first be established. The mechanism is similar to condo projects where you often see an accelerated value increase once the project is released for use.

By buying an established association you are able to:

  • see the 5 homes which have already been acquired and in operation. (If you are participating in a new association, the properties are only acquired after the inauguration of the association)
  • Book vacations as soon as you have become an owner. (If you are participating in a new association, you will have to wait about 1 year before you can go on vacation.)

Based on the above two observations, we have see that there is a significant demand for used associations, and this interest accelerates the value increase already from the time the 5 21-5 homes are ready to go into operation.

A 21-5 vacation property share is not designed to be a short term endeavor. On the contrary, it is the opposite. We want our owners to create and enjoy many years of unforgettable vacation memories with family and close friends. 

Due to the model of accumulating and sharing the investment we are in a position to acquire relatively better locations and achieve extraordinary renovation results with the properties we acquire compared to most single property buyers. Add to that the many years of experience and the outcome tends to be very favorable.

Often we identify hidden property gems on the locations, in fact, some of which, can be in really bad shape when we take them over, and therefore are in need of a complete renovation. We have learned over the years that the comprehensive building projects associated with many properties are contributing to significant additional value on top of the acquisition price of the home.

The outline above is what predominantly contributes to both short and long time value creation.

"Property value always increases over time"

The graph below, US Census Bureau, shows the US median sales price index of houses sold 1984 to the present. Property prices globally follow the same trend, as long as we stay with traditional destinations and markets, and do not venture into areas with destabilized economies and political climates.
The trend is clear - over time the property prices do increase more than the inflation. There will of course always be cyclical decreases and increases, but the evolving average is a clear upward trend over time.

Source: U.S. Census Bureau

Timing and location is of essence and therefore something top of mind.

Many, who did acquire property both domestically and internationally in the golden years prior to the 2008 financial crisis, did experience steep falls in values. In some markets the values completely bottomed out, but in most places valuation has corrected itself, and many locations even to a level higher than before the crisis. In the current global health and economic crisis, we can observe a significant interest towards single vacation properties, and that many people are looking for locations away from crowded resorts and city properties.

When we choose destinations for our associations, we do an effort to avoid too sensitive areas, in an effort to preserve price stability as much as possible.

However, as mentioned, the investment aspect is not at all the most important one as you decide to join a 21-5 association. On the other hand, we certainly recognize, that it is more likely than not, that you with your 21-5 vacation property co-ownership will experience value creation, both on the short and on the longer term.



How to finance a 21-5 vacation co-ownership share?

When you buy a 21-5 vacation co-ownership share, you pay the entire amount cash into the Association fiduciary account right after the inauguration of the Association. In addition, you pay a cash security deposit of 12 months of the monthly association fee, which will be deposited in the Association for the entirety of your ownership.

As a 21-5 owner you are in charge of establishing the needed funds. Most often, the funds are provided through:

1. Simple availability of the entire amount in cash.
2. Equity in property/-ies you might own and which you can leverage for payment.
3. Loan through your financial institution.

Due to the co-owner model, it is not possible to establish debt in the properties of a 21-5 association, however you can offer your 21-5 share as collateral to the bank, should you finance the purchase with a bank loan.

U.S. professionel advisory partners


In our field of work it is essential that we work with only the best professionals in the U.S. Partners with the highest skill and professional level within their fields.

We greatly value the sparring and support we have from these partners as it solidifies and strengthens the 21-5 concept as it relates to all the financial, legal, and tax aspects of this business.

Our owners should feel completely at ease as they join and association. If there are any questions from an owner or an advisor to one of our existing or serious potential owners, we or our partners are always available to address them fully.

How does 21-5 make its money?

We work from a premise of openness and full transparency in 21-5. Our income derives from two sources:

Our first source of income happens when we inaugurate an association. We earn a percentage of the total of all deposits once paid to the association account. This also means that we are completely free to trade properties on behalf of our associations as we have no fee structure which in any way is linked to conditions when acquiring a property. For instance, rebates, discounts or other similar price reducing measures. Only in this way can we be 100% independent of the properties we decide to acquire which at the end of the day does deliver the best results on behalf of our owners. 
The amount due to 21-5 is included in the price of the vacation property share which means that there is no additional payment on top of the equity deposit to the association.

Our experience with all the inaugurated 21-5 associations so far shows us that we have been able to add value beyond what we cost to employ.

The value primarily is added through our ability to identify the perfect properties and acquire them at the right price. In addition and just as importantly, additional value is built through our complete renovation of each property, bringing them to a new level of sustainable quality. 

This is what we mean by "win-win."

Our second source of income happens as the properties become operational to be used by the owners, 21-5 gets a monthly administration fee, but forms a part of the monthly payment.

The associations are bound to 21-5 for the first 3 years from the date of the inauguration of the association. Hereafter, the associations are free to find another administrator. We will do everything we can to never having an association "move away from home" - it is an unbearable thought!

In the event of a re-sale of a 21-5 share, we make an administration fee to compensate us for the document work getting a new owner settled in the association. If we manage the actual sales our compensation is reasonable and competitive with the normal realtor fees for house sales. Hopefully, the fee is negligible compared to the value created throughout the ownership.

Each of the above mentioned fees are described in detail in the agreement papers for each association, and are therefore fully disclosed for each association as it is inaugurated.

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


Send an email to or give us a call at

+1 888 820 TRAVEL