I own a timeshare for more than two years now. I have plans of selling it somewhere in the next four months and buying a new one or perhaps a resale one, to make it cheaper. Now my doubt is, should I pay taxes on the profit I make, if any? Do I get a deduction on any grounds? Could anyone throw some light on these issues?
Thanks for the info. It was really useful.
Sam
You'll have to pay taxes on your timeshare sale. The profit that you make on your timeshare sale is considered a capital gain and it's taxable.
Unfortunately, even if you sell your timeshare at a loss, it's not deductible. However, if you don't use your timeshare for your personal use and regularly rent it out to others, then the loss in transaction will be considered a business loss, which is deductible.
As far as tax deductions are concerned, I would have to say there are only a very few deductible items. If the property taxes for your timeshare are separately billed, they are deductible. But it's applicable only if the property tax is shown as a separate item in your billing, not as a part of your maintenance fee.
If you had taken a timeshare loan, the interest charges are deductible. Also, if you financed your timeshare with a home equity loan, the interest charges are deductible.
As far as I know, the resort in which you bought your timeshare will play an active role in this issue. When you sell a timeshare and make a profit, the resort will fill out the forms that are required and submit them to the IRS. You don't really have to worry about it. The profit you get from a timeshare sale is taxable.