donated timeshare - what's the deduction?

[jaytee]

Hi, I recently donated a timeshare to charity. The company that facilitated the deal said that I'd be able to deduct up to $5000 without an appraisal. I know that they were able to sell the timeshare for around $2500, and I received an acknowledgment from the charity that they received about $1500. My question is how much will I be able to deduct when I do my taxes?

My understanding is that I am able to deduct the fair market value of the property, which intuitively tells me that I should be able to deduct at least $2500 even though the charity received substantially less (which I hadn't realized would be the case when I started this whole process). Wishful thinking is making me wonder if I might not be able to deduct a little more, considering that the closing company had more incentive to just sell the thing quickly rather than try to find the best price they could.

Thanks for all your help!

 

[jules54]

I'm not an accountant, but I think I understood you could deduct what you paid for the timeshare. If you have the paperwork to prove it. I am sure you will have others post, telling you different opinions.

 

[Bill4728]

I'm not an accountant, but I think I understood you could deduct what you paid for the timeshare. If you have the paperwork to prove it. I am sure you will have others post, telling you different opinions.

I don't believe you can deduct the price you paid. You can deduct the fair market value. Since the charity sold it for $2500 that a good starting place, but if you can show that the value was closer to $4000 by doing comparables IMHO you can deduct $4000.

Wait for Dave M to answer he'll know.

 

[Dave M]

The tax rules under §170 of the Internal revenue Code are quite clear. You can deduct the fair market value of the property, determined based on the market in which you could sell the property - i.e., the resale market. Thus, based on your statements, $2,500 would appear to be a reasonable amount to claim as a deduction.

As stated above, the purchase price has no bearing on your allowable deduction.

 

[Hawaii123]

Market Value

I would call a timeshare resale company and get the market value from them(preferrably in writing) and use that.

 

[Dave M]

That's not a valid method of determining value, according to IRS rules, and it's unlikely to result in the correct value.

A resale company isn't likely to divulge its confidential info as to the average resale price of such weeks it handles. And if the reseller provides a number for typical asking prices, that value would likely be significantly too high.

A taxpayer can use any number for the value, without an appraisal, as long as that value used is less than $5,000. However, the taxpayer needs to be prepared with support for the number if challenged by the IRS. Based on the OP's statement, using either $2,500 or $1,500 would probably be reasonable. I'm assuming that there is some basis for the statement pertaining to the $2,500 number.

 

[Segiah]

jaytee,

And the tax U save is only the price deducted times the percentage of the highest tax bracket U are in.

Example, if U claim value of $2500 and your highest tax bracket it 20%, You only save $500 in taxes.

Thus you would probably have been better to sell it yourself. Anything above $500 would have netted U more.

P E H

 

[jaytee]

Thanks for your help, everyone!