| First, this is NOT for everyone. If you have a | | | | time (week) for it's use. As you begin to look at |
| timeshare and can sell it, great! If it's a top 5-star | | | | these methods a question comes up. How about all |
| resort during the #1 prime week, you shouldn't have | | | | those cheap timeshares selling on eBay or those |
| any trouble getting some good money for it. There | | | | listing sites? |
| are ways to increase selling it and get up to 80% of | | | | When you donate your timeshare, it is specific. |
| what you paid, but that's a different article. You can | | | | Without a sale price, you can claim up to $5,000 as a |
| find that article at #1 in the Resource Box. | | | | donation without having to have a licensed appraisal. |
| This article is for the rest of timeshare owners that | | | | However, if you are going to claim more than that, |
| want to sell, rent, give away, throw away, anything | | | | your form must be signed by a licensed appraiser and |
| to get out of a bad situation that nothing seems to | | | | be accompanied by a professional appraisal. The |
| help with. You would think that willingly donating it to | | | | appraiser is required by the IRS to provide specific |
| a worthy cause should work. If you've tried and | | | | information on each and every property he uses for |
| been rejected, don't feel bad. Most timeshare | | | | his comparables. Here's the direct IRS regulation: "For |
| donations are rejected for a very good reason. The | | | | each comparable sale, the appraisal must include the |
| charity can't sell them any better than you can and | | | | names of the buyer and seller, the deed book and |
| they don't want to take on all the headaches of | | | | page number, the date of sale and selling price, a |
| ownership you have, including the associated fees. | | | | property description, the amount and terms of |
| Let's call a spade a spade. Some timeshares start out | | | | mortgages, property surveys, the assessed value, |
| being great, but for some reason just don't work | | | | the tax rate, and the (tax) assessor's appraised FMV. |
| out. When that happens and you find yourself on the | | | | . . . Only comparable sales having the least |
| wrong end of annual bills that go up each year and | | | | adjustments in terms of items and/or total dollar |
| never, ever stop (even to your grand-kids by virtue | | | | adjustments should be considered as comparable to |
| of inheritance) the resorts don't want them back. | | | | the donated property." Think about this a minute. All |
| They want their money. After all, that's why they | | | | those Internet sales can't be used. Only sales he can |
| made you such a good deal in the beginning. They | | | | get the above information on can AND the more |
| knew every year forever they were going to be the | | | | different the comp is from the actual property the |
| receiver of a steady gravy train unless you were | | | | less it should be considered. If you have never dealt |
| willing to ruin your credit, file bankruptcy, die or | | | | with an appraiser, understand they know there is a |
| worse. Even then they can harass your descendants | | | | range of value they can fall in. They are savvy |
| for the same reasons. | | | | business people and understand that they want to |
| By the way, have you tried selling it for $1 on eBay | | | | please the person paying their bill so will adjust their |
| yet? Didn't work, huh? So far 3 charities have turned | | | | appraisal to the end of the range that best suits their |
| you down, too? Too bad. Guess what? You're NOT | | | | client and can be legally enforceable. You're paying |
| stuck. There is a way out and you can actually get | | | | the bill. Do you want a higher or lower appraisal? The |
| cash in your pocket for it. | | | | appraiser knows. |
| I won't go into all the IRS regulations covering this. | | | | Here's another direct IRS quote. "Unusual Market |
| Just realize I have and it's available as an Adobe .pdf | | | | Conditions - For example, liquidation sale prices usually |
| file you can read or download. It's just way too long | | | | do not indicate the FMV. Also, sales of stock under |
| for this presentation. It is organized and helps make | | | | unusual circumstances, such as sales of small lots, |
| everything clear. Go to to get it. | | | | forced sales, and sales in a restricted market, may |
| Here's the short version. | | | | not represent the FMV." Does that bring to mind |
| The IRS says if you donate a timeshare, it's | | | | most of those Internet and secondary market sales |
| considered real property and subject to valuation | | | | with really low prices? |
| under specific guidelines. The first is that if it's sold by | | | | If the appraiser must follow IRS requirements, where |
| or transferred by or the charity acts as an agent in | | | | is he going to get most of his information? That's |
| the process and ultimately accepts any money for | | | | right, the resort. After all, who is selling most of the |
| the donation, your income deduction is limited to the | | | | units on the open market? If you have to buy a |
| actual cash that was generated in the sale. Some | | | | replacement, where would you be most likely to find |
| people think, regardless of the sale price, they can | | | | one? The resort. So, the appraiser has to start at a |
| claim a $5,000 donation credit. Nope, the IRS is very | | | | price close to the resort prices. At that point he can |
| clear. In fact, if you the charity tells you to claim | | | | discount the price if he feels it's necessary but he |
| anything specific or even doesn't give you an actual | | | | must be reasonable in that process or he can |
| figure (which results in their claim of $0) and then | | | | jeopardize his license. |
| sells or transfers it within 36 months of you donating | | | | Now, let's look at that $20,000 timeshare you bought |
| it, they are required by law to send a special Form | | | | and can't use, trade, rent, sell or even give away |
| 8282 to the IRS notifying them that their actual | | | | now. It's costing you $1,000 per year in ownership |
| receipt was different than what they told you it was | | | | fees. If you could find a charity that would take it |
| worth and that you probably claimed the wrong | | | | and hold on to it for 36 months you have some |
| amount. Guess what the IRS does when they find | | | | freedom. You can take a $5,000 income deduction |
| out you may have claimed the wrong amount? | | | | that, with a 25% tax bracket (over $31,850 income), |
| The key here is that 36 month window. If the | | | | that's worth $1,000 returned tax dollars in your |
| charity takes title and keeps it for the full 36 months, | | | | pocket. If you paid $20,000 for it, you might want to |
| the time limit is over and what ever they get for it | | | | call an appraiser in the resort area, discuss the IRS |
| can't come back to haunt you. You're free! What | | | | rules and regulations (see the above link) and ask a |
| does the charity have to do? First of all, they don't | | | | few simple questions. Once he understands you |
| make any money on the sale since there wasn't any | | | | know the law, ask him what he feels he could |
| sale. Next, they have to contend with the normal | | | | reasonable give as an appraised value and what the |
| resorts collection process which is now directed | | | | appraisal costs. Let's jet say he said he could go to |
| against the charity instead of you. As such, if a | | | | $15,000 and still feel legal and it will cost you $500. |
| charity does do this, don't begrudge them charging a | | | | With the $15,000 appraisal you're going to get a nice |
| service fee for taking it off your hands. There are | | | | $3,750 back on your taxes. |
| commercial companies out there that will charge you | | | | What did this ultimately cost you? Well, the appraisal |
| $3,999 or more for the same service and you can't | | | | was $500, if you had to pay the closing costs, they |
| legally claim that cost or the "loss of your investment | | | | were probably another $350 to $500 and if a charity |
| money" according to the IRS unless you have a | | | | charged you a service fee of $500 to take it off |
| convincing paper trail of bills and receipts showing you | | | | your hands and hold it for 36 months your total cost |
| tried to rent it out from the very first when you | | | | ended up being $1,350 to $1,500 subtracted from |
| bought it. If you try such a loss claim, you're due for | | | | your tax bonus of $3,750 leaves you with about |
| an audit. Again that's a different story. | | | | $2,250 in your pocket after all is said and done. Oh, |
| How does this 36 month period affect you? Actually | | | | by the way, you no longer have that $1,000 owner's |
| pretty strongly. The IRS says that if there is no sale | | | | fee facing you every year for the rest of your life |
| to pin a value on, then they require a fall back | | | | AND even though 3 other charities turned you down |
| method of valuation. There are three ways and any | | | | because your timeshare couldn't be sold for beans, |
| one, two or all three can be used. It's your choice | | | | one charity ended up getting Uncle Sam to pay you |
| which ones you use. First is your original purchase | | | | off for it. Not bad! |
| price so long as current resort sale prices are in a | | | | Is there a charity that will do this? Yes. If you follow |
| similar range. Second is what it's worth as a rental | | | | the above links or contact me directly I'll be happy to |
| income property (not much so most people don't use | | | | answer any questions you may have. |
| this). Third, what would it cost you to buy a very | | | | Dr. |
| similar sized and located unit with about the same | | | | |