Tax implications of sale

[travelplanner70]

I sold my timeshare for a loss. (no surprise, I guess.) When I am reporting the sale on my tax form, do I take the original sale price PLUS closing costs and subtract current sale PLUS closing costs to get the amount of capital loss I report? Basically, I am wondering if I can claim closing costs on both ends of the sale. Thank you in advance.

 

[Dave M]

Unless you have regularly (i.e. every year) rented out your timeshare over the past few years, you do not have an allowable loss for tax purposes. A loss on sale of a timeshare used for personal purposes (occupancy, exchange, friends, etc.) is treated as a personal nondeductible loss, just as would be a loss on sale of your car, your TV set or your primary residence. However, if you had sold it for a profit, that would have been taxable.

See the TUG Income Taxes and Timeshares article for more info.

 

[travelplanner70]

Are closing costs tax-deductible? I hope the answer is yes so I can get some satisfaction about this transaction.

 

[DeniseM]

Are closing costs tax-deductible? I hope the answer is yes so I can get some satisfaction about this transaction.

Be sure you read the article that Dave posted for you, above.

 

[Dave M]

Closing costs are part of the sale transaction and, as I stated above, no loss is deductible, unless you meet the rental requirements. "No loss" means nothing related to the sale is deductible.

And as Denise suggests, please read the article. Closing costs are included in the discussion of sales.

 

[travelplanner70]

I'm sorry. I did not see that link before I wrote my second question. That can happen if one is very disappointed with the response given, I guess.

Thanks for explaining it and referring me to the link. It was helpful, but disappointing.

 

[M&M]

OK I sold my timeshare for about $500 more than I paid.
I read the TUG article that the link went to. It would appear that I will be taxed on that $500 gain. Can someone point me to what forms I need to file with my taxes?

 

[LLW]

OK I sold my timeshare for about $500 more than I paid.
I read the TUG article that the link went to. It would appear that I will be taxed on that $500 gain. Can someone point me to what forms I need to file with my taxes?

If you owned it under your own personal name, and sold it for cash instead of installment sale or any other method, you would use Schedule D of Form 1040, either Part I or Part II depending on how long you had owned it.

 

[M&M]

If you owned it under your own personal name, and sold it for cash instead of installment sale or any other method, you would use Schedule D of Form 1040, either Part I or Part II depending on how long you had owned it.

Thanks for the information!

 

[debtimeshare]

tax implications for years when you don't rent your timeshare out

I first rented out my timeshare last year and therefore claimed the income on my tax return and offset much of that by the expenses. This year, I used the timeshare myself, so there was no income. I understand that I cannot claim my expenses as a loss, but do what about the depreciation and other expenses---do they carry over to future years and if so how is that done on my tax forms?

 

[DeniseM]

but do what about the depreciation and other expenses---do they carry over to future years and if so how is that done on my tax forms?

You can't claim any of those expenses with a timeshare - they aren't tax deductible. In fact what you claimed last year wasn't really kosher either.

For more info., read the other posts in this thread, and see the blue link to the tax article.

 

[Dave M]

In fact what you claimed last year wasn't really kosher either.

Oops! In fact, those expenses (typically, depreciation, advertising, rental commission and maintenance fees) are deductible up to the amount of the rental income. Except in very unusual situations, any rental loss is not deductible

Responding to the other question, the nondeductible expenses in a non-rental year do not carry over to a future year.

 

[DeniseM]

Dave - in another post you said they are deductible if the owner rents his timeshare most years - does that only apply to deductions when selling your TS?

In other words, if you rent your timeshare only once, you can deduct the expenses for that year? But if you rent your timeshare only once, you don't get any deductions when you sell it?

 

[Dave M]

I believe what I said (or intended to say) in that other post you refer to is that a timeshare seller might be able to deduct a loss on sale if the timeshare was rented in most years, although the loss might be limited, depending on its value when the timeshare was converted to a rental. That's unrelated to whether expenses can be deducted against rental income.

The two situations - loss on sale and loss on rental (and how to calculate them) - are differentiated in the linked article.

Confirming - Appropriate rental-related expenses are deductible in any year of rental - up to the amount of rental income.