Timeshares are a great chance to take wonderful vacations each year, but where do they fit into your financial plan? It’s important to know what to expect in regards to your taxes when buying, selling, or renting out a timeshare. Plus, like many other big expenses, timeshares have the potential to qualify for tax deductions. While we wouldn’t consider timeshares an investment, some timeshare costs can be written off and might benefit you financially. Let’s break down everything you need to know about taxes and timeshares.
Keep in mind that Timeshares Only does not provide expert tax advice, so be sure to consult with a tax professional before making any big tax-related decisions.
What Is A Timeshare?
When timeshares were first developed, they were typically bought as a week at the same resort at the same time each year. As time has gone on, it has become clear that timeshare owners desire more flexibility when vacation planning. So, while timeshare weeks are still available for purchase, a more flexible points-based option is available too. Points-based timeshare owners receive a set amount of points each year to use whenever and wherever they want. Whether you are buying a timeshare week or points-based ownership, it can be a big financial decision to buy a timeshare. Even if you buy a timeshare resale, which can save you tons of money, it’s important to do research before purchasing. Buying a timeshare can affect your overall financial well-being, your credit score, and your yearly taxes.
Do You Pay Taxes on Timeshares?
The costs that you will pay when you own a timeshare, including taxes, all depend on the terms of your contract. Property taxes can be different from contract to contract depending on where your home resort is. Some timeshare contracts have property taxes included within your maintenance fees. On the other hand, in some states, the property tax is billed separately. In this case, you may be able to deduct them from your yearly taxes. You may need to provide an itemized statement from your developer to be able to prove that you paid property taxes. If you don’t see property taxes within your maintenance fees and weren’t charged separately, you may not be able to deduct them. In these cases, the timeshare resort may have been billed for the property tax instead of each owner individually.
If you own multiple timeshares in different states, you should contact a tax professional for guidance. There isn’t a limit to how many deductions you can claim, so getting expert guidance can be beneficial. They will be able to help you get all of the deductions that you can. Why wouldn’t you want to receive all of the money that you deserve?
Are Timeshare Maintenance Fees Tax Deductible?
Maintenance fees are often brought up when discussing what can be tax deductible within timeshare ownership. Typically, since maintenance fees are used to improve and renovate your home resort, they cannot be written off. The only case in which you can write off your maintenance fees is if you are renting out your timeshare. You will almost always need to report the income that you made from renting out your timeshare, which will of course be taxed. If you are renting out your timeshare, then your typical fees will be deducted from the rental’s income. This means that you should be able to deduct your maintenance fees, as well as any other management fees you pay.
Other Timeshare Tax Write-Offs
If you have a secured loan for your timeshare, then the interest paid on it may be tax-deductible. A secured loan either uses your deeded timeshare week as collateral or is a home equity loan against your primary residence. To ensure you’ll be able to deduct the interest, you may need your developer to provide a document proving that your deeded week is the loan’s security. You will not typically be able to write off interests on loans for points-based or right-to-use timeshares.
Another potential tax write-off is donating your timeshare rather than selling it. You will be able to deduct what would be the “fair market value” of your timeshare. This is an estimate of what price a buyer and seller would agree to on the resale marketplace. Fair market value is not what you paid for your timeshare and is typically lower than what purchased it for. If this value is over $5000, then you must get a formal appraisal.
Keep in mind that if you are still paying off your timeshare, then you may not qualify for any deductions. There are many factors that can affect if you qualify for timeshare-related tax deductions. Once again, if you are unsure about your timeshare’s tax situation, we suggest you contact a tax expert. They will be able to break down all of the deductions you may be able to claim. Everyone’s taxes are different and there could be other situations that we did not touch on. This is why it’s important to consult a tax advisor to get the best advice for you.
How Timeshares Only Can Help You Buy, Sell, Or Rent Out A Timeshare
If you are looking to buy or sell a timeshare on the resale market, Timeshares Only can help. As a leader in the timeshare resale space for over 25 years, our team can help you buy your ideal vacation ownership. Plus, our experts offer reputable services and can help advertise your timeshare for sale. Timeshares Only is a proud Member of ARDA, and we hold an A+ Rating with the BBB as an Accredited Business.
Again, Timeshares Only does not offer expert tax advice. Before you make a big financial decision, we suggest always contacting a tax advisor first.
Fill out a form on our website to get started with selling your timeshare, and a representative will contact you as soon as possible. Or, feel free to contact us now at 1-800-610-2734. Our business hours are Monday – Friday, from 9 AM to 9 PM EST.