Timeshare rental and tax reporting question

[Mjfuller53]

Here's my situation. I filed my income tax in February and did not even think about the two timeshare weeks I rented in 2024. After filing my taxes I received a form 1099-K from Redweek (the rental agent) reporting the "income" to the IRS. So now I have to decide to sit on it and wait for the IRS to send me an assessment letter asking why I didn't report it (with penalties of course). Or I can try to report it to the extent I have to and deduct whatever expenses I can.

In 2024 I had three weeks available, only one of which I booked and later cancelled because we decided not to use it. Therefore, I did not use my timeshare weeks in 2024 for personal use. I rented two weeks for 14 days. So I'm trying to determine if I have to report the additional income or not, and if I have to report it, what deductions can I take to offset the rental income? Simple questions? Apparently not. I've searched this forum and help apps from Intuit (Turbo tax) and Redweek in addition to the IRS rules for vacation homes and for Schedule E, etc. All I have found is conflicting information. The most hopeful, or to my advantage, comes from Intuit. This is what they've told me: "Correct- if you do not rent for more than 14 days, you do not need to report this at all." I'm a bit suspicious of this response as it seems to ignore all the other rules about personal use and prorating expenses between rental use and personal use, etc. So I'm finding the 14-day rule is about as clear as mud. Redweek refers to the 15-day rule and says you also have to use the property for personal use more than 15 days in order to exclude the income for renting less than 15 days. In one place they say you can deduct your expenses, i.e. maintenance fees, rental fees, and mortgage interest. In another place it says the maintenance fees are not deductible because they are ordinary expenses like in your main residence, which are not deductible.

From the IRS website: Topic no. 415, Renting residential and vacation property -- under the heading Minimal Rental Use:
"There's a special rule if you use a dwelling unit as a residence and rent it for fewer than 15 days. In this case, don't report any of the rental income and don't deduct any expenses as rental expenses." But I don't "use the dwelling unit as a residence." So does this statement not apply to me?

So does anyone REALLY understand how to report this income, if at all? There's a ton of opinions out there. I'd really like to know how the IRS treats it.

 

[Cynful]

I would love to see feed back on your topic as well as I am renting out my timeshare for the first time this year. I also got conflicting info searching online. Maybe the best direction is to ask a tax professional?

 

[andre10056]

May I suggest calling the IRS? And, hopefully, tens of thousands of their tele-tax-help people haven't been fired because they were clearly perpetrating waste, fraud, and abuse.

Otherwise, depending on whether or not your annual non-Social Security income isn't above a certain threshold level, and it's still below that level even if you were to include your rental income, you still wouldn't have to file in my opinion.

And if your non-Social Security income is above whatever threshold level so you WOULD have to file, my inclination would be to treat this just like any other year round rental income on the appropriate schedule (whose letter or number I don't remember at the moment). You can specify with 100% accuracy what your rental income was. Offsetting that would be expenses like your maintenance fees, Redweek fees, whatever other fees you incurred perhaps trying other rental websites, etc. In my opinion, no reason to treat your one week per year condo any different than a year round condo that you might own.

And good luck to you if you have that much net rental income. Because many people are just looking for a contribution towards their annual maintenance fees if they're unable to travel, rather than a huge amount of net rental income. Like the people advertising their weeks on "TUG last minute".

 

[VacationForever]

Disclaimer - I am not a CPA. From many past TUG threads regarding this topic, the 14 days rule only applies to renting out your residence. Timeshare rentals must be reported and do not fall under that rule. You can deduct maintenance fees and Redweek fees, paypal fees etc.

 

[SmithOp]

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

Income Tax advice for Timeshare owners

tug2.net

 

[PigsDad]

I would definitely fix it now by filing an amended return. Waiting for the IRS to send you an assessment due to a missing 1099 can take years; then you will owe penalties and interest on top of the tax (ask me how I know...).

Kurt

 

[rickandcindy23]

You may not have to pay exta taxes, but it's better to be safe than sorry. We claim all of our income but subtract our expenses.

 

[WaikikiFirst]

Intuit (Turbo tax) and Redweek in addition to the IRS rules ... conflicting information. Redweek refers to the 15-day rule ... In another place it says the maintenance fees are not deductible because they are ordinary expenses like in your main residence, which are not deductible.

I know nothing other than that tax rules have been going into deep Twilight Zone over the last 25 yrs, but Intuit's comment sounds very generic, while Rdwk's sounds much more specific to your situation (and they should know). Conflicting? Don't go with generic.
Otoh, I very much doubt "maintenance fees are not deductible", so obviously Rdwk has typical big-company lack of discipline & silos who can't get their facts straight.
The "ordinary expense" thing is interesting, but I very much doubt it is truly applied here, and must have been decided by now.
Agree with the idea: file amended return ASAP or probably live to regret it.

 

[krj9999]

And whether you would need to file a separate state income tax return will depend on the location of the timeshare you rented (if different than where you live).

 

[Cabocowboy]

Going through this now with a Timeshare in Mexico. I recently upgraded and also joined Malibu Marketing, who specializes in how to monetize your timeshare. Join them and they’ll walk you how to file your schedule E every year. You’ll use schedule E and treat your timeshare as a business. All of your expenses can offset your income.
I agree amend now but you should be able to offset most of your income with expenses. You can even depreciate your timeshare original cost for 27.5 years, or 3.63% annually. Plus travel expenses traveling to your timeshare to inspect your property.
Good luck with your refile and hope this was helpful.

 

[merlinlehman]

Since the topic is income taxes on timeshares, has anyone taken a long term capital loss for selling a timeshare at a loss? If so, did you treat it like any other long term loss? Thanks.

 

[rickandcindy23]

Since the topic is income taxes on timeshares, has anyone taken a long term capital loss for selling a timeshare at a loss? If so, did you treat it like any other long term loss? Thanks.

I don't think you can.

 

[TUGBrian]

Since the topic is income taxes on timeshares, has anyone taken a long term capital loss for selling a timeshare at a loss? If so, did you treat it like any other long term loss? Thanks.

this is covered in the article linked above.

 

[vol_90]

I suspect that if you were to talk to 3 different IRS agents and/or 3 CPA professionals you would get different answers on how to file taxes on timeshare rentals. The US tax code is way too complicated and open to interpretation in this area.

 

[ArizonaSun4Fun]

I know nothing other than that tax rules have been going into deep Twilight Zone over the last 25 yrs, but Intuit's comment sounds very generic, while Rdwk's sounds much more specific to your situation (and they should know). Conflicting? Don't go with generic.
Otoh, I very much doubt "maintenance fees are not deductible", so obviously Rdwk has typical big-company lack of discipline & silos who can't get their facts straight.
The "ordinary expense" thing is interesting, but I very much doubt it is truly applied here, and must have been decided by now.
Agree with the idea: file amended return ASAP or probably live to regret it.

Timeshare Rental Income and Losses​

If you rent your timeshare, you can deduct all current expenses, including depreciation, advertising, rental commission and maintenance fees against the rental income. (That is from the Redweek article written by a knowledgeable member. Maintenance fees are not deductible if you don't use your timeshare, or if you use it for personal use.)

 

[tjk144]

Deleted

 

[billymach4]

 

[billymach4]

View attachment 108415

So if you have not met the above rules or threshold then Redweek will not send a 1099 and report to the IRS. Interesting.

 

[billymach4]

 

[billymach4]

 

[rapmarks]

I use turbo tax
I report all timeshare rental income
I report what I took in and I use my maintenance fee as my expense as I do not use my week or bank my week
I do not deduct any other expenses such as cost of visiting my property.
I make just enough to cover maintenance fees
If I don’t make enough I cannot deduct the loss because I do not spend over 700 hours a year on my rental business.
I don’t take chances with the irs
I don’t understand why some sources say you can’t deduct maintenance fees

It does ask you how many days you rented out and how many days you used.

I earned about 2000 in rental income

 

[TheHolleys87]

View attachment 108415

I thought the minimum for 1099s had been reduced to $600. I guess not!

 

[VacationForever]

Understanding your Form 1099-K | Internal Revenue Service

Form 1099-K reports payments from payment apps or online marketplaces and from credit, debit or stored-value cards. Use it to help figure and report your correct income on your tax return.

www.irs.gov

 

[dioxide45]

I thought the minimum for 1099s had been reduced to $600. I guess not!

It depends on the type of 1099 and the reason for the payment. When someone does work for a company or business, that business should provide a 1099 if they paid out more than $600. A 1099-K is more for facilitation of moving payments between two parties. Not one party paying another directly. Think more like Paypal payments. Paypal issues the 1099-K but they are just an intermediary. They aren't paying you directly. The same would be true of Redweek. Now if I were to do some freelance work for Redweek, then they would need to provide a 1099 if they paid me more than $600.

 

[billymach4]

Love this. More confusion in the tax code.