When looking for a timeshare exit, you might be tempted to see if you can donate it to charity or achieve some other tax write-off out of the situation. After all, you’ve had to suffer through paying outrageous annual maintenance fees, assessments, and other costs. But is donating your timeshare a good idea? There are many pros, cons, and processes, and you should give careful thought to the matter.
In this article, we’ll take a look at this unique approach to a timeshare exit. After looking at the pros and cons of donating timeshare property to a nonprofit organization or other entity, we’ll look at the situations in which timeshare donation is actually possible. There are several legal aspects to think about, as well as some practical concerns.
If you’re considering this exit strategy, Centerstone Group can provide a thorough discussion of your options so that you can think holistically about what would best help your situation.
There may be some tax benefits to donating a timeshare, but a large percentage of timeshares won’t even qualify. You may have been told during a high-pressure timeshare sale presentation that if you ever decided to get rid of your timeshare, you could donate it to charity for a big tax benefit. But like so much else that you were likely told in that room, this isn’t exactly true.
While it’s hard to say that you could never get a tax write-off from a timeshare, a lot of things have to happen for that to come to pass. First, in order to get a tax deduction for a donation, you have to be donating something with real value. The amount of the deduction is directly based on the value of what you donate.
The value issue is a huge problem for someone looking to donate a timeshare. Many times, these vacation properties have no value on the real estate market or anywhere else. While you can ask a realtor or other professional, you need only look on eBay or Craigslist to find timeshares selling for $1 or even being given away for free. This is because timeshares often cost money in the form of maintenance fees and other expenses, making resale nearly impossible.
But in some cases, a timeshare might be considered valuable, even though that value is likely nothing close to the original purchase price.
If you have two timeshare weeks per year at an exotic, unique beachfront condo in Maui, Hawaii, that might have some value that you can use for an income tax deduction. If you have one of the many, many timeshares available in the Orlando, Florida, area, though, the fair market value of your timeshare is close to nothing as far as the IRS is concerned.
If you think you may be able to get a tax write-off, you can visit the IRS’s website to read more about how to value property you’re donating to get a charitable tax deduction.
Apart from the fact that donating a timeshare can be difficult, there are a lot of drawbacks to even trying. The first drawback is one of a humanitarian nature: If you truly believe in a charitable organization’s mission, do you really want to saddle it with the expense of a timeshare?
Many charities don’t want timeshares, so trying to pass one along will likely not be seen as helpful. One website vividly describes timeshares as “the black hole of charitable giving,” and that colorful turn of phrase really says it all.
Even assuming that a charity were champing at the bit to take your timeshare off your hands, the next problem is that your timeshare developer is not going to want to let you out of your contract so easily. Remember, in the land of timeshare ownership, owners are the source of income for developers.
Developers want to keep you paying annual maintenance fees and other costs. They don’t want to let a source of income off the hook so easily, so expect them to use your timeshare purchase agreement against you to stop any donation. They might have similar objections to a resale, but in general, developers would rather go after individuals, rather than charities, for their fees to be paid.
And even if you get past the developer, the tax dedication will likely not be as much as you are hoping it will be. While your timeshare might have some value, it’s likely nowhere near as much as the money you’ve pumped into it over the years. So any reward that you get for navigating this legal and tax minefield is almost certainly going to be much smaller than you anticipated.
The donation process will likely be complex and filled with traps for the unwary. Once you have determined that your timeshare has value and that you want to donate it, the next step is to make sure that the person or entity you want to donate to a) wants the donation and b) is an entity that can properly accept the donation.
On the first point, if the organization doesn’t want your timeshare, you can’t go any further.
On the second point, you need to check with the IRS to make sure that the organization to which you want to donate can accept charitable donations that will give you a tax dedication.
Once you’ve completed those tasks, you need to make sure that your timeshare developer will allow you to make the donation. In many cases, your timeshare contract will prevent you from making a transfer without getting approval from your timeshare company first. If your developer allows it, expect to pay transfer fees as well as closing costs, which will eat into any tax deduction you get.
Assuming you make it past all of these hurdles, you need to consult with experienced professionals to make sure the paperwork is done correctly and the transfer will go smoothly. As with any other legal transaction, there are a lot of moving parts, and doing it yourself can be a recipe for disaster, especially when the IRS is involved.
If you are able to make the transfer, you should consult with Centerstone Group to see whether legal advice or other expertise is needed.
In the vast majority of cases, donating a timeshare is not a good idea. After weighing the pros and cons, it becomes clear that there are simply not many benefits to you or a charity, paired with a ton of risks.
That doesn’t mean your situation is hopeless, though. Centerstone Group has helped thousands of unhappy timeshare owners exit vacation ownership, from timeshare cancellations to negotiation and pressure campaigns against developers, and sometimes even by finding good attorneys or law firms to represent its clients when necessary.
There is no one right solution, and Centerstone Group is committing to finding yours. We are an accredited, A+ rated company with the Better Business Bureau (BBB), where we have an excellent client rating of 4.79-out-of-5 stars. If you’re exploring your timeshare exit options, we are happy to talk to you! Contact us today for a free consultation.
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