Tax implications when selling timeshares is usually the last thing on your mind, but it’s important nonetheless. Selling timeshares can be very difficult not least as you are competing with the big companies who can afford to take their prospective buyers out for nice dinners.
Assuming flashy dinners aren’t in your budget range, you really have two options. You can either sell it via a licensed real estate broker or do it yourself. There are pros and cons involved with each method. You will need to pay the broker a percentage of the sales price achieved. Do not agree to pay any fees until the sale has completed otherwise there is no incentive to sell your unit.
Doing it yourself means that you save the broker’s commission but you have to deal with the sale yourself. You will have to advertise your timeshare, deal with prospective buyers and the scam artists who target timeshare resellers. You may not have the contacts open to the broker which could affect a sale.
There are other issues that you should consider. For example, the sale of your condo may cause a tax issue. Tax is a complicated area and should always take into account your personal circumstances. Our intention is to educate you regarding the possible taxes and/or deductions you may be allowed to claim. You should always seek advice from a professionally qualified individual.
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Tax Implications When Selling Timeshares – Gains
If you have owned the timeshare for less than one year, it may be more advantageous to hold it for a little while longer if you can afford to do so. Why? Tax implications when selling timeshares. You may be liable to Capital Gains Tax on any profit you make. If you are likely to make a profit, holding the investment for longer than a year may reduce the tax owed.
When calculating whether you have made a profit, you are usually allowed to deduct some of the original transaction costs i.e. the price you paid and any closing costs when you signed the timeshare contracts. In today’s market, it is unlikely you will make a profit but people sometimes do.
Tax Implications When Selling Timeshares – Losses
Usually any loss you make on the sale will not be an allowable deductible expense when you consider tax implications when selling timeshares. But this is not the case in all circumstances and depends to a large extent on whether you have ever rented your condo out.
Some people think that donating their vacation home to charity is the answer instead of selling. It may be if your intention is to benefit the charity although you may find that some refuse the donation. If your donation is motivated by thoughts of a tax write off, then you should be aware that you do not always achieve a substantial write off.
The Internal Revenue Service will probably use the current market value and not the value you originally purchased at. This generally means that you would have more money in your pocket if you sold rather than donated.
Always consult your tax advisor but you may want to bring a copy of the relevant tax laws as not all advisers are up to date with taxation issues related to selling timeshares.
In this article, we have covered how to consider tax implications when selling timeshares. This article was written to help all who have timeshares locally or internationally. With these tax implications when selling timeshares recommendations, you can definitely enjoy your travels and not have any problems when it comes to your timeshare.
Do you have any other recommendations about tax implications when selling timeshares? Share them in the comments below so that other readers can benefit from your wisdom!Looking for more travel tips? FlightVillage has you covered! Or maybe you’re ready to plan your trip – we can help with that too!