Can we claim Capital losses for tax purposes for giving away timeshares

[sharadbags]

I (like many) purchased my time share from the original developer and am just giving it away for almost free. Since this is a loss, can we claim it as capital loss in tax return? Has anyone tried it? Any experiences, pointers?

 

[PigsDad]

Not a chance. This has been discussed before and I'm sure others will point out exactly why, but basically a timeshare is not an investment, it is a personal asset. It would be like trying to deduct a loss on an automobile that you purchased new and then sold for a fraction of the new price.

Kurt

 

[easyrider]

It seems like it should follow the same rules as all property, especially when the timeshare is deeded and bought as an investment, but it doesn't. What's messed up about this is if there were a capital gain you would definitely owe Federal taxes, lol.

Bill

 

[T_R_Oglodyte]

Kurt's analogy to a car is good. The timeshare is considered personal property, and you can never claim a loss on the sale of personal property (though, as Bill points out, you would be taxed on the profit if you sold it for a gain).

There are rules for when property is considered an investment for which a loss can be claimed, but I'm pretty sure it's nigh impossible for a timeshare ownership to meet those criteria.

 

[dioxide45]

Timeshare, in many cases (if you have a deed), is real property. However, it isn't your primary residence and is considered a second home. Thus a gain is reportable for tax purposes but a loss is not deductible.

 

[dioxide45]

Kurt's analogy to a car is good. The timeshare is considered personal property

Sorry, but the analogy is actually a bad one. Most US based timeshares are deeded real property. They are not like a car at all. The better comparison is to a second home.

 

[Bailey#1]

I believe even if you sold 1 timeshare for a gain (DVC) and 1 timeshare for a lost (Most) you still can not deduct the lost from that gain.

 

[T_R_Oglodyte]

Sorry, but the analogy is actually a bad one. Most US based timeshares are deeded real property. They are not like a car at all. The better comparison is to a second home.

We will have to disagree. Even though a timeshare may be deeded (though many are not), in almost all situations for tax purposes it is treated as personal property. See the TUG advice article on timeshare and taxes.

 

[Ski-Dad]

You can deduct the loss if the asset was primarily a business/investment asset. The distinction between personal vs real property is irrelevant. For what purpose was the capital deployed? business vs personal use. If you have all the records demonstrating that it was primarily used as a business/investment asset. No personal use of the asset or trading it for anything other than $$, which you would have filed on your past tax returns. Otherwise, good luck.

 

[dioxide45]

We will have to disagree. Even though a timeshare may be deeded (though many are not), in almost all situations for tax purposes it is treated as personal property. See the TUG advice article on timeshare and taxes.

I guess we will have to disagree. I did go and look through that TUG advice article and it only mentions "personal property" once and it is relation to RTU and non-deeded timeshares. I stand by my statement that deeded timeshares are real property. A Redweek article on timeshare taxes refer to it as personal property but for tax purposes the IRS considers a vacation home and timeshares as personal assets for tax purposes. I guess for tax purposes they could be compared to personal property but deeded timeshare are still considered real property. I think the second or vacation home analogy is better because a you can use interest on a timeshare loan, like a second home, as a tax deduction for federal income tax. You can't do that with a car loan. Timeshares are also more like a second home than a car. You just happen to live in a timeshare for a fractional portion of time. I suppose one could live in their car too, but cars are title differently than homes and all timeshares.

 

[Janann]

I (like many) purchased my time share from the original developer and am just giving it away for almost free. Since this is a loss, can we claim it as capital loss in tax return? Has anyone tried it? Any experiences, pointers?

I can assure that if this were possible, someone on TUG would have written an article about it. Most of us lose money on timeshares. Hopefully the vacations make the loss worthwhile.

 

[SmithOp]

I can assure that if this were possible, someone on TUG would have written an article about it. Most of us lose money on timeshares. Hopefully the vacations make the loss worthwhile.

A CPA did

Income Tax Advice for Timeshare sales and rentals provided by a Certified Public Accountant

Get expert guidance on Timeshare resale taxes and rental income reporting. A must-read for Timeshare owners during tax season

tug2.net

 

[T_R_Oglodyte]

I guess we will have to disagree. I did go and look through that TUG advice article and it only mentions "personal property" once and it is relation to RTU and non-deeded timeshares. I stand by my statement that deeded timeshares are real property. A Redweek article on timeshare taxes refer to it as personal property but for tax purposes the IRS considers a vacation home and timeshares as personal assets for tax purposes. I guess for tax purposes they could be compared to personal property but deeded timeshare are still considered real property. I think the second or vacation home analogy is better because a you can use interest on a timeshare loan, like a second home, as a tax deduction for federal income tax. You can't do that with a car loan. Timeshares are also more like a second home than a car. You just happen to live in a timeshare for a fractional portion of time. I suppose one could live in their car too, but cars are title differently than homes and all timeshares.

But the OP's question only involved claiming a capital loss on taxes. In that regard, I think the analogy of an automobile is apt.

 

[dioxide45]

But the OP's question only involved claiming a capital loss on taxes. In that regard, I think the analogy of an automobile is apt.

But the analogy to a second home is also apt. I guess we are both just arguing for the sake of arguing??

 

[T_R_Oglodyte]

But the analogy to a second home is also apt. I guess we are both just arguing for the sake of arguing??

.

 

[CO skier]

I guess we will have to disagree. I did go and look through that TUG advice article and it only mentions "personal property" once and it is relation to RTU and non-deeded timeshares.

Not sure what TUG advice article you read, but there is this from a TUG advice article that spells it out, indisputably. (... and PigsDad's analogy to a car is even mentioned)

"If you (and/or relatives or friends) use the timeshare, exchange it or let it go unused, a loss on sale will be personal and not deductible, just as a loss on the sale of your home or your car would not be deductible. Even though your intent might be to hold it as an investment, your personal use results in no tax loss being allowed upon sale."

Income Tax Advice for Timeshare sales and rentals provided by a Certified Public Accountant

Get expert guidance on Timeshare resale taxes and rental income reporting. A must-read for Timeshare owners during tax season

tug2.net

 

[CO skier]

I (like many) purchased my time share from the original developer and am just giving it away for almost free. Since this is a loss, can we claim it as capital loss in tax return? Has anyone tried it? Any experiences, pointers?

In a word:

"No."

If you sell through a broker or otherwise receive an IRS Form1099 as a result of the sale, you will have to report it on your tax return -- in a way that does not result in a tax loss. This has worked for me in the past:

Taxed on proceeds from sale of timeshare ?

Sorry if this has already been covered, but I can't seem to find an answer. We are in the process of selling a Marriott Timeshare at a significant loss - sale price is about half of what we paid for it, and with a 40% commission on that sale price (to Marriott!), the resulting proceeds will be...

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