Tax implications of TS sales?

[kjd]

With so many timeshares being resold for peanuts compared to new developer prices, what are the tax implications involved in these transactions? Can the orginal owner claim a loss on their income tax? Some owners selling on EBay appear to have lost almost all of their money.

Do these tranactions fall under IRS investment rules such as capital gains and losses? Must an owner convert a timeshare into rental property in order to gain any tax advantages? When is an owner considered a "timeshare investor"?

While EBay lists timeshare ownership under real estate, is it considered real estate in the investment sense by IRS? (Subject to depreciation schedules etc.,) I believe that I read somewhere that the real estate tax portion of the MF is deductible on a 1040. Are there any other parts of the MF that may be deductible? Thanks for your responses.

 

[AwayWeGo]

No Investment. No Deduction.

The portion of annual maintenance fees that covers real estate tax can be deducted, but none of the rest.

If you sell your timeshare for more than you paid, you pay taxes on the gain.

If you sell your timeshare for less than you paid, you don't get to deduct anything for the loss. That's because a timeshare is not an investment -- i.e., property held for the production of income -- but just a fun piece of fluff to enjoy for vacations.

Some few folks -- extremely few -- rent out a bunch of timeshares as a business. For them, more stuff is deductible than for us regular walking-around timeshare owners -- i.e., all we can deduct is the real estate tax portion of the annual maintenance fee.

So it goes.

-- Alan Cole, McLean (Fairfax County), Virginia, USA.​

 

[Dave M]

For more details on the tax rules, see this Income Taxes and Timeshares article from the TUG Advice section.