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How to Get rid of a timeshare is many owners primary concern. They can't sell them, give them away and even find most charities won't accept them as donations. Here are several ideas on how to use, sell, rent or get rid of your timeshare.
The Dirty Little Secrets about Donating Your Timeshare Yup, there are a few little pitfalls in anything, including donating timeshares. There are some very friendly companies around that will give you a nice offer like, you pay them almost $4,000 up front and they'll take the timeshare off you hands. Think of all the money you'll save in the next 20 years by being free of those annual owners fees! Just write it off as an investment loss (better NOT!). Now you've heard about donating your timeshare and getting some tax write off. That sounds better than paying someone to get rid of your timeshare. Wait, you've tried that, too, and they've told you they won't accept your timeshare donation? What's going on here? I'm going to tell you a few things the IRS wants you to know BEFORE you donate your timeshare. Understand that all this is there in the IRS publications if you know what to look for and how to find the hidden cross references they don't tell you. Contact me for specific references. First, why won't the charity take your timeshare donation? Because they don't want to be in your position. If they take your timeshare donation, they’ll be hit with all those ownership fees and lose money. They make sure your timeshare is one they KNOW will sell from the experience of their trusted broker. Then they make sure you continue to hold title and be responsible for all the fees until they actually sell it. THEN they take title from you, hold it a few moments (usually less than 6 moments in all) and then sign it over to the actual buyer that wants it. That's called a double closing and is perfectly legal. Finally, they give you the proper IRS form that states they received the timeshare donation from you and you can now have an IRS income deduction. But what can you deduct? Here's the beginning of these dirty little IRS secrets. 1. If the property is transferred within 36 months of the original acceptance date of the donation, the value used for the timeshare donation credit is defined as the actual money received by the charity. That means your $20,000 timeshare, which they sold to $500 gets you $500 in credit. If you're in a 20% tax bracket, that's worth about $100 in cash back to you at tax time. Yah, that's right, anytime in 36 months. On top of that, they have to notify the IRS of the true value they received. You can claim anything you want but when the IRS cross checks they'll want that over refund back with interest. 2. If you claim the deduction as more than $500 you have to use a special Form 8283 Noncash Charitable Contributions. If you claim more than $5,000 you must have a licensed appraiser do a licensed and sworn to appraisal AND sign the Form 8283, too. Now, if the NPO got $6,000 cash for it and can show you the cash receipt, you don't need the appraisal, but that's what you get to claim. 3. If the timeshare is NOT sold within the 36 month window, a sale price can not be used, the IRS says there are three ways to determine value. A.) What are similar properties selling for on the open market; B.) what is the income generation value if it is a commercial property that is rented MORE than 7 days a year; or C.) what would it cost to replace the timeshare? Only A.) and C.) apply. Guess who sells the majority of timeshares on the open market? The resort. In addition, they generally list the sale price on the title documents, especially if it's being financed. Whereas, people like you and me usually don't want to admit receiving any money for it. Here's the problem. If the appraiser sets out to claim that you can't sell it the same way or for the same price the resort can, he's doing you a disservice and not doing his job right. In fact, the IRS specifically says that a depressed sale price should NOT be used for valuation. So, what do you do now that you know a few of the dirty little secrets? If you have decided you do want to donate your timeshare, make sure you understand the above. Next, don't try to cheat the IRS. When you do contact someone to donate your timeshare to, find out what their plans are for dealing with your timeshare donation, how long they are going to hold it, how they will dispose of it, what documentation they will give you concerning the value of your timeshare donation and keep in mind the points above. Keep in mind that a charity must cover their expenses and will probably charge you a fee if they are not going to sell and get the cash out of your timeshare. Consider what you would have to deposit to cover at least 3 years of ownership fees to delay any sale until after the 36 months if they are going to hold it that long. After all, they get nothing out of it until they do sell and you don't want that done while you're trying to maximize your deduction credit. ------------------- Dr. Ken Rich is a on the board of Community Health Training, Inc., a non-profit organization (NPO) that accepts timeshare title as a direct donation instead of reselling it. Details on the process can be found at http://www.communityhealthtraining.org/Timeshares/ . He can be contacted at SeniorDirector@CommunityHealthTraining.org .
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