Starting A Timeshare Rental Business

[WyndhamWyzrd]

That's quite the income not needing to be reported. Are we talking state or federal income? Can you offer a link for verification?

One thing you don't want to do is poke the bear, known as the IRS, too many times.

IRS determines it a hobby if the business average 3-5 years to turn a profit. I think the paperwork averages it around that $14,000 mark (similar to when youre gifted money, if its under $14k it doesn't have to be claimed on tax forms)
You cannot deduct expenses if you do not claim it as income - but I looked into this before and that was the threshold if i remember correctly.
Same reason the IRS doesn't come after people with ETSY stores and things like that.

+++ NOT TAX OR BUSINESS ADVISE+++

 

[dioxide45]

+++ NOT TAX OR BUSINESS ADVISE+++

That is good, because it is very bad advice.

Tips for taxpayers who make money from a hobby | Internal Revenue Service

Tax Tip 2019-85, July 1, 2019

www.irs.gov

 

[WyndhamWyzrd]

So your worried about registering as a travel agent or seller of travel in these states, but no issues with renting other peoples deeded real estate without a realtor license. States seem to be far more stringent when it comes to license for real estate than it does for registering as a seller of travel.

Well I have a real estate / broker license too so I'm covered in that aspect too.

 

[WyndhamWyzrd]

That is good, because it is very bad advice.

Tips for taxpayers who make money from a hobby | Internal Revenue Service

Tax Tip 2019-85, July 1, 2019

www.irs.gov

Looks like some things changed in 2018 - but again, If it's less than 2% AGI , it doesnt have to be claimed.

I also run my businesses differently than most so I have some protections when it comes to this kind of issue

 

[dioxide45]

Looks like some things changed in 2018 - but again, If it's less than 2% AGI , it doesnt have to be claimed.

I also run my businesses differently than most so I have some protections when it comes to this kind of issue

Please cite your sources.

 

[WVBaker]

IRS determines it a hobby if the business average 3-5 years to turn a profit. I think the paperwork averages it around that $14,000 mark (similar to when youre gifted money, if its under $14k it doesn't have to be claimed on tax forms)
You cannot deduct expenses if you do not claim it as income - but I looked into this before and that was the threshold if i remember correctly.
Same reason the IRS doesn't come after people with ETSY stores and things like that.

+++ NOT TAX OR BUSINESS ADVISE+++

I have to say, that's an interesting comment and no, not advice but, I would still like to see the information from them. Do you have a link to that code?

 

[grupp]

Well I have a real estate / broker license too so I'm covered in that aspect too.

I don't have either of these licenses so don't know much about them as to their code of ethics. But if you are renting something that you don't have a legal right to rent, since it is prohibited by both RCI and II, I would assume that would be some type of ethics violation and could put your license at risk.

 

[daverunfast]

Maybe he's just confusing the 14 day rule. If you rent out a piece of real estate less than 14 days a year you don't have to pay fed income tax on that income.

 

[WyndhamWyzrd]

I don't have either of these licenses so don't know much about them as to their code of ethics. But if you are renting something that you don't have a legal right to rent, since it is prohibited by both RCI and II, I would assume that would be some type of ethics violation and could put your license at risk.

Not wrong


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[WyndhamWyzrd]

Please cite your sources.

A previous post has the link to the IRS webpage. It’s listed there


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[Ty1on]

Exactly. These getaways are all over Ebay / Online Rentals / ect. all the time. Any of us that scour these sites for desirable deeds see them.
Like I said, may be some risk. I agree some states may require brokerage/licenses but as a licensed travel agent, this isn't something I take too seriously.
IF they're going to spend the time going after individual rental owners, wouldn't they shut down the ebay/online rental scammers first?
At less than $14k annual income off the program it doesn't even need to be claimed on year end income forms.

Good luck Tuggers

Firstly, billiard ball theory says that the larger a population, the higher the odds for a particular event. Someone who rents exchanges as a business will have sufficient volume to attract these investigators, it isn't hard to find. They aren't so much interested in the guy who exchanged, then became unable to use it and is trying to rent it out as a one-off. They are interested in the wannabe timeshare rental tycoons that post frequent rentals, particularly at resorts that regularly hit the bargain bin.

Secondly, every rental you see on EBay is NOT an exchanged stay. The only way to find out if it's an exchanged stay is to ask the lister for proof of reservation. And that's exactly what the investigators do.

 

[dioxide45]

A previous post has the link to the IRS webpage. It’s listed there


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The only IRS link in this thread was one I posted and there was nothing there indicating that hobby income didn't need to be reported.

 

[easyrider]

So your worried about registering as a travel agent or seller of travel in these states, but no issues with renting other peoples deeded real estate without a realtor license. States seem to be far more stringent when it comes to license for real estate than it does for registering as a seller of travel.

A person can register as a travel agency with their state and use any inventory they have access to. They can use their own inventory and other owners inventory for rentals. If a person wanted to sell any real estate but their own they would need a brokers license.

There are plenty of timeshares for rent that could easily be marked up by a travel agent renting to a client. I know some people in Seattle that would target events and gather inventory for it. Most of the inventory was not their own. Often times they will break up the week allowing a daily rental. It doesn't take much to put this type of business in the unprofitable or too much work sector.

Bill

 

[WyndhamWyzrd]

Looking it over -
Looks like about $4000 would be the amount not $14,000

So let’s say you can claim $3k in expenses and gross at least 4, at least that much is “tax free” if you will.
Still - I’d operate this outside of Us tax laws if it’s possible for you . Us Dual citizens have some perks outside the US gov


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[Beach57]

Why buy Timeshares to start your business? Instead, get the word out that you are willing to rent out timeshares (i.e. a rental agent for owners) for a fee. This way you won't have the annual financial responsibilities and tie up your assets.

If successful you could then grab some select Timeshares to enhance your offerings (i.e. juicy beach and ski locations during winter weeks).



.

I think there’s a need for this. I would be a customer!

 

[dioxide45]

Why buy Timeshares to start your business? Instead, get the word out that you are willing to rent out timeshares (i.e. a rental agent for owners) for a fee. This way you won't have the annual financial responsibilities and tie up your assets.

If successful you could then grab some select Timeshares to enhance your offerings (i.e. juicy beach and ski locations during winter weeks).

Kind of like what KOALA, Redweek, AirBnB and Vrbo?

 

[dioxide45]

Looking it over -
Looks like about $4000 would be the amount not $14,000

So let’s say you can claim $3k in expenses and gross at least 4, at least that much is “tax free” if you will.
Still - I’d operate this outside of Us tax laws if it’s possible for you . Us Dual citizens have some perks outside the US gov


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But that still isn't $4000 in non reportable income. You still need to report the income.

 

[SueDonJ]

It just doesn't seem very smart to title a thread, "Starting A Timeshare Rental Business" on the premier site devoted to timesharing when all the major players that have anti-commercial venture language in their pockets regularly read the site. Does it?!?!

 

[Ty1on]

It just doesn't seem very smart to title a thread, "Starting A Timeshare Rental Business" on the premier site devoted to timesharing when all the major players that have anti-commercial venture language in their pockets regularly read the site. Does it?!?!

It's not like the majors will able to distinguish this guy from the hundreds of others who have an epiphone about getting rich by violating contract terms of exchanges, without even the thought that discount exchanges are discount exchanges because no one wanted them in the first place.....

 

[rickandcindy23]

It just doesn't seem very smart to title a thread, "Starting A Timeshare Rental Business" on the premier site devoted to timesharing when all the major players that have anti-commercial venture language in their pockets regularly read the site. Does it?!?!

I agree with you, Sue, but the OP is apparently new to all of this and sees dollar signs before his/her eyes. I think renting something of quality to cover maintenance fees and travel for free is a great idea, and it does work, but this is not a good time to get into the rental business. Wyndham is cracking down and you can bet other companies are watching to see if they are successful.

I think bragging about renting RCI inventory is a big mistake. It could be detrimental to the braggert. I wouldn't rent inventory for a business and then brag on making money on it.

 

[SueDonJ]

It's not like the majors will able to distinguish this guy from the hundreds of others who have an epiphone about getting rich by violating contract terms of exchanges, without even the thought that discount exchanges are discount exchanges because no one wanted them in the first place.....

But they don't look for "this guy," they look for a pattern of behavior using bots and other search methods that eventually lead them to where they want to go. This thread only serves to help them narrow their search parameters. In that way it's like every other thread on every other site that helps them, except the title of this one blatantly BROADCASTS, "Lookie here, I am the droid you're looking for!"

 

[daverunfast]

But they don't look for "this guy," they look for a pattern of behavior using bots and other search methods that eventually lead them to where they want to go. This thread only serves to help them narrow their search parameters. In that way it's like every other thread on every other site that helps them, except the title of this one blatantly BROADCASTS, "Lookie here, I am the droid you're looking for!"

The OP didn't say anything about renting exchange or last call weeks, she asked about what she should buy to rent. As far as I know that's allowed under every timeshare system. We need more owners looking at this opportunity and we need them on HOA boards making it easier to do so.

 

[jules54]

I doubt this "businessman will be plowing through the massive amount of rental business needed to get on the radar of cooperate.
I'd say if you're averaging a few rentals a month in different resorts , different areas of the country. Make a few extra bucks, have some side hustle energy, I doubt there's much downside.
Yes, worst case you may see a rejection out of RCI but in the long run, that's not a huge concern of mine and maybe not his.

In the words of Captain Jack , Take What You Can, Give Nothing Back

I know you don’t agree, but renting or RCI last call and exchanges and Interval International getaways and exchanges are against the rules of both companies. It is a big deal. Both exchange agencies can cancel your memberships and take the weeks you have banked.
All it takes is for 1 other Tugger, moderator or even some joe blow know nothing to post something or notify the exchange agency and Bam you are on their radar. The exchange agencies and companies like Wyndam do read the boards on the internet.Some folks think they can’t to found by their user names. Unfortunately in this day of technology everyone can be found who post publicly.
I’m posting from experience the companies can lock your account all the accounts that have similar phone numbers and addresses on them no matter what name they are in. It’s both a hassle to get them unlocked and embarrassing.

Stick with renting what you own or don’t have to advertise to rent. Just my opinion.

 

[Ty1on]

The OP didn't say anything about renting exchange or last call weeks, she asked about what she should buy to rent. As far as I know that's allowed under every timeshare system. We need more owners looking at this opportunity and we need them on HOA boards making it easier to do so.

You are absolutely correct. Unfortunately, a bomb was dropped in Post #2 that effectively hijacked the intended discussion.

 

[rickandcindy23]

There was a person who came to TUG years ago that was banned from RCI for renting exchanges and extra vacations/ last call inventory. He was trying to get the rest of us outraged that he was banned, and he had dozens of reservations rented that were ahead of him that he would have to refund. He was not a happy camper. But he didn't get much sympathy from the masses.

We all know the rules and don't take those chances. I tried to do a search for the thread but came up empty. It's been so long ago, but I remember thinking how awful it would be for me to lose my RCI membership. We own at a few resorts that only exchange through RCI. And it would be even more terrible today because I have so many points built up in both weeks and points that I would lose. No, I don't take any chances.