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Tax Information/experience requested

TTom

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Not looking for specific/official tax information/advice!

Just want to know if anyone has any experience writing off timeshare maintenance fees when/if units are used as accommodation for a business trip. To add to the mix, this is about using points (HGVC) to secure accommodations.

I know I am going to need to find a good tax person to help with this, but I'm hoping someone here has some experience and can provide a little more info.

Thanks!

Tom
 

Timeshare Von

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If you are "renting" to yourself, and claiming the income as such, I would think you might be able to claim the business expense. And that seems to be just a zero net transaction.
 

SmithOp

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As an example, let's say you have an electronics business and attend CES in Vegas, you may even have a booth there. Your lodging expense is deductible on Sched C as an expense to offset your business income for the year. It would be limited to the days of the trade show, say it's 4 days but you stay 7, then you would have to pro rate. The cost (maint fee) for the points used is easily quantified because HGVC breaks it down to daily points on the point charts.
 

TTom

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As an example, let's say you have an electronics business and attend CES in Vegas, you may even have a booth there. Your lodging expense is deductible on Sched C as an expense to offset your business income for the year. It would be limited to the days of the trade show, say it's 4 days but you stay 7, then you would have to pro rate. The cost (maint fee) for the points used is easily quantified because HGVC breaks it down to daily points on the point charts.
Hi Dave,

That's kind of what we think. We just need to confirm, and that will involve a tax professional. The kicker is determining "which which is which." We have points from 2021, 2022, and 2023 being used for both HGVC and RCI reservations. Obviously, the financial "machinations" are not necessarily simple.

Thanks!

Tom
 

TTom

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If you are "renting" to yourself, and claiming the income as such, I would think you might be able to claim the business expense. And that seems to be just a zero net transaction.
Not renting, just using what we own for business purposes.
 

CO skier

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Not renting, just using what we own for business purposes.
To claim something as tax deductible, it has to be income to someone or something (LLC, etc.). In this case, to claim the business deduction would require reporting the associated maintenance fee as personal income. (Consult a professional tax advisor, of course, but it seems like more hassle than it is worth.)
 

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Hi Dave,

That's kind of what we think. We just need to confirm, and that will involve a tax professional. The kicker is determining "which which is which." We have points from 2021, 2022, and 2023 being used for both HGVC and RCI reservations. Obviously, the financial "machinations" are not necessarily simple.

Thanks!

Tom
Your reservation details will show which bucket the points are from, and you have the mf statements to show cost. Any tax preparer appreciates when a small business owner has accurate written records.
 

Timeshare Von

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To claim something as tax deductible, it has to be income to someone or something (LLC, etc.). In this case, to claim the business deduction would require reporting the associated maintenance fee as personal income. (Consult a professional tax advisor, of course, but it seems like more hassle than it is worth.)
This is the general principle I was considering when I made my earlier comment.
 

TTom

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Your reservation details will show which bucket the points are from, and you have the mf statements to show cost. Any tax preparer appreciates when a small business owner has accurate written records.
Yeah. Wish I was a good small business owner. (;-}
 

TTom

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This is the general principle I was considering when I made my earlier comment.
Why would a maintenance fee I am paying be considered personal income? What I am doing is using a timeshare instead of renting a hotel room, which I believe would be a legitimate business deduction. Are you saying it would not be (that's one part of the question I was looking to clarify from personal experience)? Have you (or anyone else who is listening ever had a tax preparer tell you that you could not deduct timeshare accommodations that were part of a business trip)?

I'm really not trying to be contentious or challenging, I just think this is a potentially tricky area, and I might need to look for a tax preparer with specific experience to get it right.

Thanks!

Tom
 

TTom

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Your reservation details will show which bucket the points are from, and you have the mf statements to show cost. Any tax preparer appreciates when a small business owner has accurate written records.
Honestly, this is the first time we are using a LOT of our points for business trips. I've never seen (or looked for) a breakout of which points went for which reservation (does that extend to RCI?), so that will be an interesting exercise. I am coming from the perspective of "is it necessary to be that granular with which points went for which reservation and what was the exact maintenance fee for that year (when the points might have been used from an earlier year, the current year, or borrowed from next year)?"

I guess it's ultimately going to come down to who is doing my taxes!

Thanks!

Tom
 

dioxide45

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To claim something as tax deductible, it has to be income to someone or something (LLC, etc.). In this case, to claim the business deduction would require reporting the associated maintenance fee as personal income. (Consult a professional tax advisor, of course, but it seems like more hassle than it is worth.)
Not exactly sure what you mean? If I buy a box of pens as an office expense for my business, that is income to Staples, so I suppose it is tax deductible. Most resort HOAs are setup as an LLC and they indicate the maintenance fee as a revenue item. So I suppose it would still be considered tax deductible.

I think another concern here would be if the business owned by the OP is an LLC or separate entity yet they paid their maintenance fees out of their personal funds. They could lease the unit to the business, but IRS has very strict rules on this type of situation and I would still suppose it is more hassle than it is worth for the few hundred in tax savings.
 

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@TTom - Welcome back! Long time no see! :hi:
 

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Why would a maintenance fee I am paying be considered personal income? What I am doing is using a timeshare instead of renting a hotel room, which I believe would be a legitimate business deduction. Are you saying it would not be (that's one part of the question I was looking to clarify from personal experience)? Have you (or anyone else who is listening ever had a tax preparer tell you that you could not deduct timeshare accommodations that were part of a business trip)?

I'm really not trying to be contentious or challenging, I just think this is a potentially tricky area, and I might need to look for a tax preparer with specific experience to get it right.

Thanks!

Tom
Think about what happens when you rent a hotel room and deduct it as a business expense. You may deduct the expense because the hotel is reporting it as income and paying the tax on that income.

By claiming a business deduction for your maintenance fees, you are essentially in the same position as the hotelier -- you are renting out accomodations to your business. That is income to you, personally. The tax preparer will not tell you that you cannot deduct the expense, but they will need some documentation that what you are deducting is income to some other entity, in this case that entity is you, so you would need to claim the income.

What you are trying to do is convert your maintenance fees to something totally tax deductible. The tax loophole abuse, if this were permited, is obvious.
 

CO skier

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Not exactly sure what you mean? If I buy a box of pens as an office expense for my business, that is income to Staples, so I suppose it is tax deductible. Most resort HOAs are setup as an LLC and they indicate the maintenance fee as a revenue item. So I suppose it would still be considered tax deductible.

I think another concern here would be if the business owned by the OP is an LLC or separate entity yet they paid their maintenance fees out of their personal funds. They could lease the unit to the business, but IRS has very strict rules on this type of situation and I would still suppose it is more hassle than it is worth for the few hundred in tax savings.
Maybe the OP can clarify, but it certainly sounds like the maintenance fees are being paid out of personal funds, and the OP is trying to claim a business deduction on a portion of those personal maintenance fees without reporting the corresponding rental income.

My timeshare is a non-profit; it pays no income tax on hundreds of millions of dollars of revenue from members. If I rent any reservations, the income from that rental is taxable to me either as an individual or as a business, if I am running it as a business. The IRS is cracking down on the under reporting of this kind of income.
 

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@TTom - Welcome back! Long time no see! :hi:
Hi Denise!

Yeah, it has been a long time. I still keep an occasional ear out, but, in general, I am using my timeshares to my satisfaction, and I’m not having as much time as I would like to visit and schmooze.

Hope you are doing well and enjoying life!

Ciao,

Tom
 

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I guess it's ultimately going to come down to who is doing my taxes!

I'd look at it this way -- is the possible savings from a rather non-standard deduction worth the possible IRS scrutiny?

Our standing order for our accountant is -- we want to pay as little as possible, while never, ever running the risk of an audit. And if we DO get audited, you'll go deal with them first.
 

TTom

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Maybe the OP can clarify, but it certainly sounds like the maintenance fees are being paid out of personal funds, and the OP is trying to claim a business deduction on a portion of those personal maintenance fees without reporting the corresponding rental income.

My timeshare is a non-profit; it pays no income tax on hundreds of millions of dollars of revenue from members. If I rent any reservations, the income from that rental is taxable to me either as an individual or as a business, if I am running it as a business. The IRS is cracking down on the under reporting of this kind of income.
To be very clear, I own a number of timeshare intervals that have been used for personal (vacation) purposes. I pay maintenance on them to the various HOAs ( or whomever collects those things). I think you (or someone else) posted above that the maintenance fees I pay are reported by that entity as income. That makes perfect(?) sense.

What I am doing/saying is that I am using the time share interval that I am paying for in conjunction with business travel. That travel is generating income for me, and any accommodations necessary as a part of that income-generating process, e.g., renting a hotel room, would be considered legitimate business expenses. Does that not make sense? I’m just saying that the expense for my business accommodations is in the form of timeshare maintenance fees, rather than hotel charges.

There is no income-generating (to me) ownership involved.

My logic is, why would I rent a hotel room when I can stay in a timeshare I am paying for?

If my maintenance fees were not being reported or considered as income by the timeshare association, I can see where this could be an issue. I doubt that is the case, but I am open to the question.

I realize this could be a very gray area in the eyes of the IRS, which is why I posed the question. Given my particular circumstance, the numbers are significant, so it’s worth it for me to pursue.

Hope that helps clarify the situation.
 

TTom

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I'd look at it this way -- is the possible savings from a rather non-standard deduction worth the possible IRS scrutiny?

Our standing order for our accountant is -- we want to pay as little as possible, while never, ever running the risk of an audit. And if we DO get audited, you'll go deal with them first.
I hear you!

Thanks!

Tom
 

dioxide45

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Maybe the OP can clarify, but it certainly sounds like the maintenance fees are being paid out of personal funds, and the OP is trying to claim a business deduction on a portion of those personal maintenance fees without reporting the corresponding rental income.

My timeshare is a non-profit; it pays no income tax on hundreds of millions of dollars of revenue from members. If I rent any reservations, the income from that rental is taxable to me either as an individual or as a business, if I am running it as a business. The IRS is cracking down on the under reporting of this kind of income.
I don't think it matters if you purchase something from a non profit. It would still be tax deductible if it was a business expense, wouldn't it?
 

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I realize this could be a very gray area in the eyes of the IRS, which is why I posed the question. Given my particular circumstance, the numbers are significant, so it’s worth it for me to pursue.
Maybe your tax advisor will do a better job of explaining the tax implications than a group of timeshare owners. I know I am not getting paid for this.
 

TTom

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Maybe your tax advisor will do a better job of explaining the tax implications than a group of timeshare owners. I know I am not getting paid for this.
I'm with you. I was just wondering if this is something that would be confusing to your everyday average tax preparer, so I should raise it as a question when I am looking for professional advice. I also thought that there might actually be some timeshare owners here who had specific experience in doing the same thing I am asking about.

You have added some good insights I wasn't really aware of.

A virtual drink for your time!

Thanks!

Tom
 

SmithOp

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There are different rules for a business entity tax return versus personal return for individuals with a small home business.
 

Timeshare Von

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Think about what happens when you rent a hotel room and deduct it as a business expense. You may deduct the expense because the hotel is reporting it as income and paying the tax on that income.

By claiming a business deduction for your maintenance fees, you are essentially in the same position as the hotelier -- you are renting out accomodations to your business. That is income to you, personally. The tax preparer will not tell you that you cannot deduct the expense, but they will need some documentation that what you are deducting is income to some other entity, in this case that entity is you, so you would need to claim the income.

What you are trying to do is convert your maintenance fees to something totally tax deductible. The tax loophole abuse, if this were permited, is obvious.
THIS! Thanks CO skier for responding.
To the OP, I'm not a tax accountant, nor have I used one. But I have used my timeshares for business travel frequently, and have avoiding going down that path that might create a red flag on my tax returns. PLUS . . . it's not enough money worth the hassle to take a deduction.
 
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