[2011] Donation to Florida Veterans Assistance Assoc.

[gparsons]

Have any of you donated your timeshare through the Florida Veterans Assistance Association? It appears to be cheaper than Donate to a Cause.

Here's the cost FVAA gave me:
administration fee $775 (required to initiate the transfer)
closing fee 275 (billed later by the title company to complete the transfer)
county recording fee (est) 50 (ditto)\
resort transfer fee 125 (ditto)
total fees $1,225

It says "Our administration fee covers our cost and provides funding for our veterans program (and is the only funding we will receive from this transfer). The transfer fee is from a recently completed transfer, but is set by the resort and, therefore, subject to change without notice."

 

[DFC Answers]

Attorney for Donate for a Cause

We are more expensive than they are, BUT in order for you to take a tax deduction for a donation of real property to a 501(c)(3) charity you must deed the property to the charity. A representative at Florida Veterans told one of my staff that they don't deed the properties to themselves in order to avoid the cost. They skip the charity and deed the property from you to a new owner. The reason why they are cheaper may be because they are skipping the very step required for you to get a write off. Confirm with them first that they are double deeding each property or use our service where I can guarantee that we do.

 

[travelgirl410]

Success with Florida Veterans Assistance Association

We just successfully donated a deeded week at Wyhdham Fairfield Glade through the Florida Veterans Assistance Assn. At the suggestion of Denise at TUG, we first tried giving it away in the TUG Marketplace. No takers. Having read some mixed reviews of the FVAA on TUG, we were a bit hesitant, but it seemed their early problems were because of some disreputable closing companies. After talking at length with Kim at FVAA, we started the process in November. The deed was successfully transfered on February 6, 2012. What a relief, and I can truly recommend them.

Our costs were:
$775 Donation to FVAA
$199 Closing costs for United Title Transfer
$299 Wyndham's title transfer fee

Regarding the tax implications - we are able to claim the above costs for 2011, but because the transfer didn't take place until this year, anything we might claim as far as the value of the property will be on our 2012 taxes. Although we're told we can claim up to a certain amount, we will claim only what it sold for, if anything. To us, it's not worth any problems with the IRS. We're just happy to be out from underneath it, and the donation to the FVAA was well worth it.

We considered using Donate for a Cause, but we decided that any deduction we might get on the value/sale of the property probably wouldn't offset their higher fees. Again, our concern was the legitimacy of the "value" we might be quoted.

Bottom line - the Florida Veterans Assistance Association and United Title Transfer worked for us.

 

[theo]

Some alleged thoughts on "donations" and "deductions"

inadvertent duplicate of post below voluntarily deleted --- sorry.

 

[theo]

Some alleged thoughts on "donations" and "deductions"

I'm certainly not a tax expert (and I don't play one on TV either), but it seems both logical and straightforward to me that the "fair market value" of a timeshare which can't be given away for free is, well...ZERO!

Accordingly, I have to suspect that the "tax advice" above from DFAC and others may well be entirely incorrect. Maybe I'm mistaken, but I certainly wouldn't be looking for any tax deduction on a donated timeshare already proven to be worth exactly nothing in the reality of the open marketplace....

 

[Dave M]

I'm a CPA who has been in tax practice or working constantly with federal tax info for the last 47 years.

In addition to theo's appropriate remarks, the costs associated with making the donation are definitely not deductible. Amounts may be deducted only if there is a specific tax provision allowing such a deduction. There is a provision allowing a deduction for the fair market value (as determined in the market - the resale market - to which the donor has access), but no provision allowing expenses related to the deduction. No deduction is allowed in excess of the fair market value. Any entity or person claiming otherwise is giving improper tax advice.

 

[Nolathyme]

I'm a CPA who has been in tax practice or working constantly with federal tax info for the last 47 years.

In addition to theo's appropriate remarks, the costs associated with making the donation are definitely not deductible. Amounts may be deducted only if there is a specific tax provision allowing such a deduction. There is a provision allowing a deduction for the fair market value (as determined in the market - the resale market - to which the donor has access), but no provision allowing expenses related to the deduction. No deduction is allowed in excess of the fair market value. Any entity or person claiming otherwise is giving improper tax advice.

Dave, Can you provide an excerpt or link to the tax provision that discusses the determination of fair market value?

I would also be interested in seeing how the IRS defines "resale market".

I would also be interested in seeing how the IRS defines "to which the donor has access".

 

[Dave M]

Rather than quote the law and regulations, which are often long and almost indecipherable for most of us, I'll refer to a plain-English IRS publication.

Here is a quote from IRS Publication 561:

Fair market value (FMV) is the price that property would sell for on the open market. It is the price that would be agreed on between a willing buyer and a willing seller, with neither being required to act, and both having reasonable knowledge of the relevant facts.

I think that says it all. Those who buy directly from a developer don't have a "reasonable knowledge of the relevant facts" (i.e., what they could buy that same timeshare for in the resale market). Thus, the developer sales price is not fair market value. Further, the only "open market" I am aware of for timeshares is the resale market.

There is also a section in the same IRS Publication dealing with sales of comparable properties. The criteria are that weight given to those other sales depends on

• the degree of similarity between the two properties (e.g., identical timeshares?).
• whether the other sales were close to the valuation date.
• the circumstances of the sale - whether it was at arm's length with a knowledgeable buyer and seller, with neither having to act.
• The conditions of the market in which the other sale was made - whether unusually inflated or deflated. (Certainly the developer market is grossly inflated. The resale market has been unusually deflated for the past several years. Whether that will continue is anyone's guess.)

There is an old revenue ruling that refers to the market to which the buyer and seller have access, but I am no longer working in an office with Lexis or a similar research tool that would allow me to quickly find it. However, that ruling did equate the market to which a buyer and seller both have access to as an "open market" (discussed above). To your other question, the IRS does not define "resale market" as far as I know.

You can take any position you want in filing a tax return. Whether it will hold up in an IRS exam is another question. And remember that the IRS agent's job is to raise revenue - fairly - for Uncle Sam. Thus, if there is a questionable issue, expect the agent to make a determination that raises tax revenue (i.e., reduces the value of the charitable donation). You can appeal, but it can get expensive to get a competent attorney or CPA to represent the taxpayer.

 

[Nolathyme]

You are simplifying this too much.

So what is “reasonable knowledge of the relevant facts”?

Is it only - you can buy a timeshare cheaper outside of a timeshare sales presentation?

Should the relevant facts also include:

1) The last 5 – 10 years maintenance fees
2) Special assessment history
3) Reserve fund amounts
4) Audited reserve fund needs analysis
5) # of paid and unpaid ownership weeks

Should the relevant facts also include:

1) The ability to exchange into other resorts
2) The ability to get a $400 a night unit for $400 of maintenance fees for the week
3) The ability to find nothing to exchange for your $700+ maintenance fees

 

[bogey21]

You are trying too hard to justify a value that doesn't exist for tax purposes. The IRS will look at what a Week is selling for in the open market. It is that simple. If audited, trying to argue otherwise may get you a little but not more than comparable market transactions. Trust me.

George

 

[tschwa2]

Part of me thinks - how could one be faulted if using the tax basis value for property taxes paid on each week.

 

[BocaBum99]

Dave,

What if there were 2 transactions?

1) A $1000 donation to the charity. No strings attached. Just a check.

2) A free transfer of a timeshare from an owner to a third party. No money exchanges hands. Owner pays transfer fee.

Why wouldn't the $1000 check be a charitable contribution?

 

[chalee94]

What if there were 2 transactions?

are there really 2 transactions or is the one intrinsically tied to the other?

i don't think it would be that tough for the IRS to point out that part of the $1000 "donation" is payment for selling and administrative costs...

tschwa2's idea is interesting but i wouldn't want to be the first to try to run that through an audit.