Timeshare Depreciation: It’s Not Worth as Much as You Think
Anybody who has ever sat through a long, high-pressure timeshare sales presentation has likely heard about the supposed value of timeshares. “Vacation ownership is an investment,” they tell you. “You can sell it in a few years!” Statements like these are false. In fact, normal timeshare depreciation ensures that your purchase will be nearly worthless before the ink even dries on your timeshare contract.
This can be a shocking fact to many people, as we learn throughout our lives that real estate has inherent value that often rises over time. While that’s true, it doesn’t apply to timeshares, which are commonly seen as toxic by real estate brokers and buyers.
The reason? Unlike normal real property, timeshares come with endless, large expenses like annual maintenance fees and special assessments. Simply holding a timeshare costs thousands of dollars every year. This fact is the reason that thousands of timeshare owners have come to Centerstone Group for help with exiting their unwanted timeshares.
In this article, we’ll take a look at the truth about timeshare depreciation and how comparing timeshares to other property purchases is like comparing apples to oranges. We’ll also look at the data showing timeshare depreciation and discuss the options for minimizing the financial loss if you are currently struggling with the burden of a timeshare.
Do Timeshares Hold Their Value Over Time?
No, timeshares do not hold value over time. In fact, they have practically no value. Contrary to what the salesperson might have told you, unlike most real estate, timeshares are a terrible investment.
Traditional real estate holds value. For example, you might buy a second home that you plan to use as a vacation property for $100,000. That fair market value is usually based on what other people will readily pay for a similar house, or the amount that the local assessor estimates for the purpose of property taxes. Plus, in the past decade, the appreciation of the average home value has been 5% per year.
But this kind of valuation and appreciation doesn’t really work in timeshares. People pay one price to developers, and that price is vastly higher than what people will pay each other for their timeshares.
Your purchase price might have been $20,000 or $40,000 for your points or timeshare fractional ownership, but the truth is that timeshares almost never sell for any real value on the resale market.
One website looked at resale value and found that even so-called high-end timeshares (e.g., Disney) sold, at the very most, for a shocking 15% of the original prices. Keep in mind, this is the absolute maximum that the author found. Most people sell their timeshare units for far less, and if they can even find a buyer to sell to, the process can sometimes take years.
If you’re thinking that this lack of value might be deductible on your income tax return, think again. In most cases, losses from a taxpayer’s timeshare held for personal purposes do not count as valid tax deductions.
While there may be a deduction allowable for properties held for business use, the specific tax law and IRS tax rules should be discussed with a competent CPA or other tax professional. Therefore, your depreciation expense cannot be borne by the government.
Given this parade of bad news, some owners have become so desperate to stop the financial bleeding that they have taken to advertising that they will simply give their timeshares away for free. This phenomenon should tell you all you need to know about the supposed resale value of a timeshare.
How Much Does a Timeshare Depreciate After Purchase?
Given the information cited above, it’s fair to say that most timeshares lose most or all of their value the moment that you sign the purchase agreement. Keep in mind that there is not a resale market where the values tend to go up or down constantly.
With very few exceptions, the value of your timeshare property will drop. Statistics on timeshare resales are scarce, and the vast majority of people who try to sell them usually can’t even find someone who will take them for free.
There may be a few dramatic exceptions to this nearly universal rule. Nearly all of those exceptions will focus on the nature of the timeshare and its physical location. For example, if you have a deeded timeshare in an exotic or rare location (like a private corner of Maui or Tahiti), that timeshare might have some more resale value than the average timeshare. The fact remains, though, that you will always sell it for less than the purchase price you paid.
The best way to figure out whether you can legitimately sell your timeshare and make any money would be to consult with a qualified Realtor who specializes in timeshare resales. The sad truth, though, is that you likely do not have one of those rare timeshares.
In Light of Timeshare Depreciation, Can You Ever Sell a Timeshare for a Profit?
No, you can’t sell your timeshare for a profit. Timeshares are fake value products, designed to be economic millstones that keep you paying maintenance fees and other costs to timeshare developers for the rest of your life.
But that doesn’t mean you can’t find a way out. Centerstone Group has helped thousands navigate their way out of tough timeshare agreements. Depending on how long ago you purchased your timeshare, the company that sold it to you, and other factors, there are several different ways that you can get out. (Unfortunately, there is little to no chance that you will get any money whatsoever out of the deal.)
With decades of experience in the timeshare industry, Centerstone Group’s team can help you with a timeshare rescission, a transfer to a willing recipient, or a negotiation with your developer to take the timeshare back through our proprietary pressure campaign.
Therefore, even though you likely can’t make a profit on the sale of your timeshare, you have plenty of options for getting out. And getting out of your timeshare contract is the absolute best thing you can do to save yourself money in the future.
Can You Rent Out a Timeshare?
Given the problems with selling, it’s fair to wonder whether you can perhaps stop the economic bleeding by using your timeshare as a rental property, then using the rental proceeds to pay your annual maintenance fees and other amounts.
Unfortunately, in many cases, your contract will forbid timeshare rental activity. This usually happens because the resort is renting out its own rooms and does not want your rental use to compete with its own. Therefore, any rental income that you receive from a timeshare is strictly limited to what the timeshare company will allow.
Escape From the Financial Black Hole of Timeshare Depreciation
Much like a black hole, timeshares are extremely difficult to escape once you are pulled in. Timeshare depreciation is a big part of that pull. If no one will buy your vacation home or even accept it for free, you are stuck paying fees and costs to your timeshare company forever. That is, unless you have the help of experts.
Centerstone Group can use its inside knowledge of the industry to help you escape. We are an accredited, A+-rated company with the Better Business Bureau, where our clients have given us a 4.77-out-of-5-star rating. No matter how tough your situation seems, we have likely seen it before and can work on getting you out.
Contact us today for a free consultation, and we can get to work for you.
Anybody who has ever sat through a long, high-pressure timeshare sales presentation has likely heard about the supposed value of timeshares. “Vacation ownership is an investment,” they tell you. “You can sell it in a few years!” Statements like these are false. In fact, normal timeshare depreciation ensures that your purchase will be nearly worthless before the ink even dries on your timeshare contract.
This can be a shocking fact to many people, as we learn throughout our lives that real estate has inherent value that often rises over time. While that’s true, it doesn’t apply to timeshares, which are commonly seen as toxic by real estate brokers and buyers.
The reason? Unlike normal real property, timeshares come with endless, large expenses like annual maintenance fees and special assessments. Simply holding a timeshare costs thousands of dollars every year. This fact is the reason that thousands of timeshare owners have come to Centerstone Group for help with exiting their unwanted timeshares.
In this article, we’ll take a look at the truth about timeshare depreciation and how comparing timeshares to other property purchases is like comparing apples to oranges. We’ll also look at the data showing timeshare depreciation and discuss the options for minimizing the financial loss if you are currently struggling with the burden of a timeshare.
Do Timeshares Hold Their Value Over Time?
No, timeshares do not hold value over time. In fact, they have practically no value. Contrary to what the salesperson might have told you, unlike most real estate, timeshares are a terrible investment.
Traditional real estate holds value. For example, you might buy a second home that you plan to use as a vacation property for $100,000. That fair market value is usually based on what other people will readily pay for a similar house, or the amount that the local assessor estimates for the purpose of property taxes. Plus, in the past decade, the appreciation of the average home value has been 5% per year.
But this kind of valuation and appreciation doesn’t really work in timeshares. People pay one price to developers, and that price is vastly higher than what people will pay each other for their timeshares.
Your purchase price might have been $20,000 or $40,000 for your points or timeshare fractional ownership, but the truth is that timeshares almost never sell for any real value on the resale market.
One website looked at resale value and found that even so-called high-end timeshares (e.g., Disney) sold, at the very most, for a shocking 15% of the original prices. Keep in mind, this is the absolute maximum that the author found. Most people sell their timeshare units for far less, and if they can even find a buyer to sell to, the process can sometimes take years.
If you’re thinking that this lack of value might be deductible on your income tax return, think again. In most cases, losses from a taxpayer’s timeshare held for personal purposes do not count as valid tax deductions.
While there may be a deduction allowable for properties held for business use, the specific tax law and IRS tax rules should be discussed with a competent CPA or other tax professional. Therefore, your depreciation expense cannot be borne by the government.
Given this parade of bad news, some owners have become so desperate to stop the financial bleeding that they have taken to advertising that they will simply give their timeshares away for free. This phenomenon should tell you all you need to know about the supposed resale value of a timeshare.
How Much Does a Timeshare Depreciate After Purchase?
Given the information cited above, it’s fair to say that most timeshares lose most or all of their value the moment that you sign the purchase agreement. Keep in mind that there is not a resale market where the values tend to go up or down constantly.
With very few exceptions, the value of your timeshare property will drop. Statistics on timeshare resales are scarce, and the vast majority of people who try to sell them usually can’t even find someone who will take them for free.
There may be a few dramatic exceptions to this nearly universal rule. Nearly all of those exceptions will focus on the nature of the timeshare and its physical location. For example, if you have a deeded timeshare in an exotic or rare location (like a private corner of Maui or Tahiti), that timeshare might have some more resale value than the average timeshare. The fact remains, though, that you will always sell it for less than the purchase price you paid.
The best way to figure out whether you can legitimately sell your timeshare and make any money would be to consult with a qualified Realtor who specializes in timeshare resales. The sad truth, though, is that you likely do not have one of those rare timeshares.
In Light of Timeshare Depreciation, Can You Ever Sell a Timeshare for a Profit?
No, you can’t sell your timeshare for a profit. Timeshares are fake value products, designed to be economic millstones that keep you paying maintenance fees and other costs to timeshare developers for the rest of your life.
But that doesn’t mean you can’t find a way out. Centerstone Group has helped thousands navigate their way out of tough timeshare agreements. Depending on how long ago you purchased your timeshare, the company that sold it to you, and other factors, there are several different ways that you can get out. (Unfortunately, there is little to no chance that you will get any money whatsoever out of the deal.)
With decades of experience in the timeshare industry, Centerstone Group’s team can help you with a timeshare rescission, a transfer to a willing recipient, or a negotiation with your developer to take the timeshare back through our proprietary pressure campaign.
Therefore, even though you likely can’t make a profit on the sale of your timeshare, you have plenty of options for getting out. And getting out of your timeshare contract is the absolute best thing you can do to save yourself money in the future.
Can You Rent Out a Timeshare?
Given the problems with selling, it’s fair to wonder whether you can perhaps stop the economic bleeding by using your timeshare as a rental property, then using the rental proceeds to pay your annual maintenance fees and other amounts.
Unfortunately, in many cases, your contract will forbid timeshare rental activity. This usually happens because the resort is renting out its own rooms and does not want your rental use to compete with its own. Therefore, any rental income that you receive from a timeshare is strictly limited to what the timeshare company will allow.
Escape From the Financial Black Hole of Timeshare Depreciation
Much like a black hole, timeshares are extremely difficult to escape once you are pulled in. Timeshare depreciation is a big part of that pull. If no one will buy your vacation home or even accept it for free, you are stuck paying fees and costs to your timeshare company forever. That is, unless you have the help of experts.
Centerstone Group can use its inside knowledge of the industry to help you escape. We are an accredited, A+-rated company with the Better Business Bureau, where our clients have given us a 4.77-out-of-5-star rating. No matter how tough your situation seems, we have likely seen it before and can work on getting you out.
Contact us today for a free consultation, and we can get to work for you.