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Property Tokens
Property tokens are the fractionalized percentages that represent a member's share. Through the Whimsy Platform, investors can purchase a percentage of the holding entity listed on the platform. This is done through the purchase of tokens that are minted and locked on the Cardano blockchain.
As a token holder, investors are entitled to a share of the monthly rental income generated by the tenant, with the amount determined by the portion of tokens the holder owns.
Example: If you are holding 10% of the holding entity you will receive the equal amount in net profit (after costs) of the monthly rental income for just holding.
Multi-unit property generates $7,200/m in rental income. After $2,310 in property costs there will be a remainder of $4,890 in net profit. If you own 10% of this property you will receive $489 to your membership account monthly. You then have the choice of how to withdraw in either USD using ACH (Plaid) directly to your bank account or ADA via your wallet or our custodial wallet.
In addition to monthly rental income, these tokens also offer potential appreciation and depreciation opportunities. Since the tokens represent a percentage of the ownership in the holding entity, their value may fluctuate based on the property's valuation that is reassessed once a month. Our marketplace is where you can buy/sell percentage shares and benefit from appreciation, but on a fractionalized level.
What Does Home Appreciation Mean In Real Estate? A house or investment property increasing in value over a period of time. A raised value of a property can lead to the owner making a profit upon selling it or earning more income through monthly rent from their tenants.
Depreciation is the process used to deduct the costs of buying and improving a rental property. Rather than taking one large deduction in the year you buy (or improve) the property, depreciation distributes the deduction across the useful life of the property. Our properties will be following the MACRS method of depreciation.
Any building or structure where 80% or more of its gross rental income is from dwelling units. Useful life in years is depreciated for 27.5 years. Sources: investopedia & IRS
Example: If you’ve made $50 in income from rents, but the property on paper depreciated (for tax purposes only) by $1000 and you owned 5% of the holding entity, then you would actually benefit from a paper loss of $50, which would negate your rental earnings completely.
As a result, even though you’ve physically received $50 for the year, you actually incur $0 in nominal income tax liability for that year through ownership in the property.
