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Question:


Would a timeshare be considered an asset?
-GulfCoastGuy


Answer:


Maybe, maybe not. Arrangements for timeshares – houses or condominiums, typically in resort destinations like Hawaii, Florida or the mountains, that can be used for a week or two every year – generally are done in one of two ways. They can be sold as fractional ownership of a property or merely as the right to use it. In the first case, a timeshare would indeed be considered an asset, with all the tax consequences that go with it. You can deduct mortgage interest, and any net profit from renting it out is taxable, as is any capital gain you realize when you sell it.

If you hold the right to use a property, then you are more or less a renter, not an owner, and so the timeshare is not an asset. Well, it is; it’s just not yours. When the number of years that you are granted the right to use the property has elapsed, the owner takes it back. If this is your sort of timeshare, don’t feel as though you’re missing out on a big score. Owning a timeshare isn’t exactly a path to riches. Buyers are often scarce when an owner wants to unload one, especially a property that’s not in a prime location or available during a peak vacation period.
-Conrad de Aenlle



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