Consumer Advocacy
Timeshare Renting: Selling Your Week
Although many timeshares are sold – many of them scams – as “investment properties” (units one can purportedly rent out or sell at a profit), experts and seasoned timeshare owners insist that this is a dubious prospect. Timeshares are not investments, they are pre-paid personal vacations. That having been said, there are a few cases where it might be beneficial to rent out a timeshare week; if, for example, you are unable to use or cancel a booking, renting may ensure that little money will be lost on the time. If you’re considering renting out your timeshare, however, here are a few points to consider:
It will probably cost, and not earn, you money.
One of the unfortunate facts of the timeshare industry at present is the nature of supply and demand – the former outweighing the latter considerably. Unless you rent out to the timeshare to a friend, family member, or acquaintance, the cost of advertising the week along with adjusting the rent price for the current market will probably result in a financial loss. This loss might very well be lower, however, than forgetting the week entirely and paying for unused resort time. Also note that you cannot claim a financial loss on your tax return for timeshare rentals unless certain criteria are met (see below).
Figure out if it's feasible.
Look at comparable rent offerings to find a good price range for your timeshare week. Call the resort to discover their policy on renters that are not obtained through an ordinary exchange company. You may be liable for any damage caused to the property by the renter. Decipher the fine print and take this into consideration during your search.
Beware Listing Agents
As with timeshare resales, the timeshare rental market is brimming with scandal. Many online listing companies require upfront fees without any promise that a renter will be found. Extreme caution should be exercised while locating an appropriate place for your ad; also remember that simple classified websites and newspaper sections often work just as well, if not better, than listing websites.
Rent with care.
Since the renter will be using your timeshare week, it’s crucial to find an honest, trust-worthy individual or group of individuals. Prepare your advertisement with all the details in mind – the nature of the resort, the size of the room, what is included in the cost of the timeshare, etc. Run background checks on rent applicants to find a good match. And have a rental agreement on hand that stipulates the legal ramifications of your transaction.
Remember the Tax Issue
From our Timeshare Tax FAQ:
What about if I rent my timeshare out? Surely that money doesn’t count as income?
This is a common misconception. Renting out a timeshare is generally no different from renting out any other property, unless one condition is met: you use the timeshare for at least 15 days per year but sublet it for less than 15 days per year. Most situations do not fall under this category; one would need to own at least four timeshare weeks at the same resort to begin qualifying.
However, while renting your timeshare you are allowed several offset deductions: maintenance fees, advertising fees, rental commission and depreciation could all be itemized on a Schedule E for relevant tax cuts. However, there’s a rule in place that doesn’t make it possible to file for a rental loss (this is where your expenses exceed your rental income) in most situations: if you rent out your timeshare for a yearly average of one week or less, the deductions on it cannot count as a rental loss. Like the instance above, you would need to own several weeks at a single resort and use some of them personally in order to qualify. You would also have to actively participate in the act of renting – if the Disneyworld Resort did all the work for you while you wrote checks for ads it wouldn’t work. In short, these instances are extremely rare and thus cannot be considered by most timeshare owners. Some exceptions are won in instances where a timeshare owner uses a title transfer company and provides proof that they purchased their timeshare as an "investment".
With all these difficulties, the world of timeshare rentals has become a competitive and seldom lucrative landscape. That having been said, it is one viable option to consider when timeshare owners find themselves with a week they cannot use. Good luck!
