Just wondering do you deduct your TS?

[chriskre Super Moderator Find all posts View Profile Close chriskre]

Dave McClintock over at TUG is a CPA and he probably knows more about taxes and timesharing than almost anybody at the IRS. I respect his knowledge on this subject immensely.
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The only area where there may be some murkiness is where there is a clear business purpose for travel, and you stay in a timeshare that you own. It may be that there is an allowable deduction, but I suspect not because the timeshare is still personal property and use of personal property in a business generally is not deductible.

Do you have a link to the TUG thread? I'd like to read it.

My understanding of timeshares at least in the state of Florida is that they are "real property" NOT "personal property."

I'm no lawyer by any means but do sell real estate.

Legal definition:

The principal distinctions between real and personal property, are the following: 1. Real property is of a permanent and immovable nature, and the owner has an estate therein at least for life. 2. It descends from the ancestor to the heir instead of becoming the property of an executor or admin-istrator on the death of the owner, as in case of personalty. 3. In case of alienation, it must in general be made by deed and in presenti by the common law; whereas leases for years may commence in futuro, and personal chattels may be transferred by parol or delivery. 4. Real estate when devised, is subject to the widow's dower personal estate can be given away by will discharged of any claim of the widow.These are some interests arising out of, or connected with real property, which in some respects partake of the qualities of personally; as, for example, heir looms, title deeds, which, though in themselves movable, yet relating to land descend from ancestor to heir, or from a vendor to a purchaser

[chriskre Super Moderator Find all posts View Profile Close chriskre]

Dave has a section for that in his TUG article:
Timeshare Users Group Advice - Income Taxes and Timeshares

The short version is: you can deduct the MFs from the rental proceeds, but if you end up with a net loss, you can probably only carry it forward, rather than offset other income in that year.

I believe there are exceptions for realtors to this law.

[bnoble Senior Member Find all posts View Profile Close bnoble]

Yeah, well, good luck with that. Like I said, it's not my tax return, so I don't care what you claim. It's your audit.

[T. R. Oglodyte Moderator Find all posts View Profile Close T. R. Oglodyte]

I believe there are exceptions for realtors to this law.

Do you have a citation to support that belief, or is it just something you heard?

There is a lot of misinformation floating around in this area - for example I know people who are absolutely believe that if they donate use of a week to a charity auction they can deduct the maintenance fees for the week as a charitable donation.

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I have a very good friend who is a retired IRS auditor. I asked him about this donation for a charitable auction - his response was that it clearly was not an allowable deduction. (BTW - he is also a timeshare owner - at least two, if not three, weeks in one of the Mexican resorts. And he occasionally donates a week for charity auction.)

I also asked him if claiming this type of deduction was something that would raise the profile of a return for an audit. His response was that there were many things that increase the probability of the IRS auditing a return, and the best thing to do is be sure that you follow the rules.

That's what he said. As he was saying that he was winking at me continuously. Knowing him I took that to mean that with his words he was giving me the "official answer", but non-verbally he was saying I was correct.

[T. R. Oglodyte Moderator Find all posts View Profile Close T. R. Oglodyte]

Do you have a link to the TUG thread? I'd like to read it.

My understanding of timeshares at least in the state of Florida is that they are "real property" NOT "personal property."

I'm no lawyer by any means but do sell real estate.

[I]Legal definition:

The principal distinctions between real and personal property, are the following: …

Your citation is irrelevant to the IRS. The distinction made by the IRS is not whether the property is personal or real; it's whether the property is personal or business.

A house that you own and live in is personal property. A house that you own and operate as a rental is business property. A timeshare that you own is personal property.

Dave's article also addresses the situation if you get into the business of renting out your timeshare.

[chriskre Super Moderator Find all posts View Profile Close chriskre]

Do you have a citation to support that belief, or is it just something you heard?

There is a lot of misinformation floating around in this area - for example I know people who are absolutely believe that if they donate use of a week to a charity auction they can deduct the maintenance fees for the week as a charitable donation.

As a Real Estate Professional, as defined by the IRS, you may be deduct expenses over the standard limit of $25,000.
THERE ARE SPECIFIC RULES TO QUALIFY.
Following is a brief summary of these rules.

CONSULT YOUR TAX ADVISOR TO SEE IF YOU QUALIFY AS A REAL ESTATE PROFESSIONAL FOR IRS PURPOSES

Full-time real estate professionals may be able to deduct 100% of their rental property tax losses from their income. That's not true for people who spend less than full time as real estate professionals or rental property owners. Details are spelled out in the Internal Revenue Code 469(c)(7).

If you are a real estate agent or broker, a landlord, a professional property manager, a developer or are in the construction business, then the IRS considers you to be a Real Estate Professional. SUBJECT TO certain rules.

It is especially important for the Real Estate Professional who materially participates in the operations of rental real estate to be aware that ever since 1994 they are no longer subject to the Passive Loss Rules.

1. More than half of the taxpayer's personal services in all businesses must be in real property businesses. A real property business is real property development, construction, acquisition, conversion, rental, management, leasing, or brokerage

2. The taxpayer must spend more than 750 hours a year in real property trades or businesses.

NOTE: For time to be counted in either of the above two tests, the taxpayer must materially participate in the activity.

3. The taxpayer must materially participate in each rental real estate activity unless he or she has filed an election to group all rental real estate activities as one (for purposes of materially participating).

It may be a good idea to get a Real Estate License.

THE TAXPAYER SHOULD ALSO BE KEEP GOOD RECORDS OF THEIR INVOLVEMENT IN THE BUSINESS

[T. R. Oglodyte Moderator Find all posts View Profile Close T. R. Oglodyte]

As a Real Estate Professional, as defined by the IRS, you may be deduct expenses over the standard limit of $25,000.
THERE ARE SPECIFIC RULES TO QUALIFY.
Following is a brief summary of these rules.

CONSULT YOUR TAX ADVISOR TO SEE IF YOU QUALIFY AS A REAL ESTATE PROFESSIONAL FOR IRS PURPOSES

Full-time real estate professionals may be able to deduct 100% of their rental property tax losses from their income. That's not true for people who spend less than full time as real estate professionals or rental property owners. Details are spelled out in the Internal Revenue Code 469(c)(7).

If you are a real estate agent or broker, a landlord, a professional property manager, a developer or are in the construction business, then the IRS considers you to be a Real Estate Professional. SUBJECT TO certain rules.

It is especially important for the Real Estate Professional who materially participates in the operations of rental real estate to be aware that ever since 1994 they are no longer subject to the Passive Loss Rules.

1. More than half of the taxpayer's personal services in all businesses must be in real property businesses. A real property business is real property development, construction, acquisition, conversion, rental, management, leasing, or brokerage

2. The taxpayer must spend more than 750 hours a year in real property trades or businesses.

NOTE: For time to be counted in either of the above two tests, the taxpayer must materially participate in the activity.

3. The taxpayer must materially participate in each rental real estate activity unless he or she has filed an election to group all rental real estate activities as one (for purposes of materially participating).

It may be a good idea to get a Real Estate License.

THE TAXPAYER SHOULD ALSO BE KEEP GOOD RECORDS OF THEIR INVOLVEMENT IN THE BUSINESS

That appears to me to say that if you are a real estate professional you don't need to treat your rental activities as passive income. So in response to the comment by bnoble, it may be true that you might be able to fully deduct a loss in the year it occurred even if were not totally offset by other related income.

But I suspect that if you dig into this you might find that the provisions you cite apply only to business property; unless your timeshare can pass the IRS tests of being business property I don't think it will fall under these rules.

[JWC Super Moderator Find all posts View Profile Close JWC]

I had my own business for several years. Personally, I wouldn't take the risk of triggering an audit nor waste the time for such a small deduction.

You have already spent far more time on this than it is worth.