Has your dream vacation property become a nightmare? Unfortunately, many nowadays find themselves with a timeshare property they can't afford.
Perhaps you bought it during better economic times. Maybe you no longer have the circumstances or desire to vacation in the same place every year. Or maybe you received the property through inheritance and never wanted it to begin with.
Whichever situation you find yourself in, you're now wondering how to offload the timeshare
without losing any more money.
Read on to learn more about timeshare donation and resale options. What Are My Options?
Many of the 7.9% of Americans who own a timeshare property are happy with their investment. Others, for various reasons, need to let theirs go.
If you fall into that category, what can you do? Here are the three most common solutions:
Timeshare resale. If your timeshare is in a highly desirable location, you may be able to resell it. However, since new timeshares are so readily available, there aren't too many people in the market for a used timeshare.
Timeshare donation. If you're unable to sell your timeshare, you may be able to donate it to charity. Alternately, you could gift it to a friend or family member who agrees to take over the maintenance fees.
Timeshare cancellation. If you can't sell it and don't want to donate it, a legitimate timeshare cancellation company may be able to legally free you of your timeshare.
Unfortunately, letting go of a timeshare almost always results in financial loss.
Contrary to what they told you at the timeshare presentation, most of these properties do not hold their value or gain equity. Some are worth only a fraction of what the buyer paid for them - perhaps less than the annual maintenance bills!
For this reason, the IRS classifies all timeshares as "worthless investments."
This doesn't mean your situation is hopeless. You just need to be realistic about what your timeshare is worth. It's also important to understand that you will probably not recoup some (or even most) of your investment. Beware of Scams
Whether you're considering timeshare donation, resale, or cancellation, you need to be very careful of scams.
Sadly, many companies out there know how desperate you are to sell your timeshare. They know that the property is a financial drain. They know you're eager to get rid of it.
These scam companies often make big promises, offering to take your property off your hands for an upfront fee. In most cases, once they have your money you'll never hear from them again.
Then you're not only out the fee you paid, but you're still stuck with the timeshare.
Some companies take financial fraud one step further. They buy up timeshare properties and put them into a "shell" company created with the sole intention of filing bankruptcy.
How do you know if the company you're considering working with is legitimate? Here are a few red flags to watch out for:
Asking for large upfront fees
Promises of profit
Promises of "eager buyers" waiting
No matter which route you choose to take with your timeshare, research the company carefully to ensure it's legitimate! Pros and Cons of Timeshare Donation
If you do manage to find a legitimate timeshare donation company, there are a few things you should know before you proceed.
Some timeshare donation companies try to tell you that your entire donation is tax-deductible. The idea of a big tax break is appealing, which is why many dive in without second thought.
Let's get something clear, though. On the off-chance that yours is one of the very few properties that held or increased its value, you could end up with a decent tax write-off.
However, for the vast majority of timeshare holders, your property likely decreased in value. And no matter how much you paid for it, the IRS will only allow you to write off the current fair market value of the property.
Let's say you paid $25,000 for your beach bungalow in Mexico. Over the past few years, the market value plummeted and your timeshare is now worth only $2,500.
If you give this property away through timeshare donation, the price you originally paid for it is irrelevant. In this instance, your total allowable tax deduction would be the current market value of $2,500.
These numbers, sad to say, are still on the generous side. One company reports that many donated timeshare properties sell for as little as $50
The same company also noted that the average timeshare donation only generates about $400 to charities. If you truly care about philanthropy, you're better off sending a check to the charity of your choice.
Here are a few other facts worth noting:
Companies may employ their own property assessors to inflate the value of your property for tax purposes. This could haunt you down the road in the form of an IRS audit and hefty fines.
If your timeshare is worth very little, you may actually have to pay the company to take it from you.
Some companies won't consider timeshares that still have a mortgage or are behind on maintenance fees. They'll only take properties that are free and clear.
As you can see, there are many important factors to weigh when considering timeshare donation. Final Thoughts
So, what are the pros and cons of timeshare donation? It's true that a legitimate company may be able to take your timeshare off your hands.
However, it will likely cost you a few thousand dollars in transfer fees. And regardless of what the company claims, you shouldn't count on a huge tax write-off for your donation.
If you're looking for an option with less risk, you may want to consider timeshare cancellation. At PMG, we're an attorney-backed agency that uses the power of the law to get you out of your timeshare contract.
Would you like to know more about how to legally get rid of your timeshare? We invite you to contact us for more information or to schedule a free consultation