When you buy into a time-share resort, you buy the right to use a particular unit at a particular time each year. You may be one of several owners who use the unit around the year. Alternatively, the resort may be the legal owner, and all you really own is your reserved time period. Your tax deductions are more limited with a time share than with a regular vacation home.
Maintenance fees are just what they sound like. You and your fellow owners pay them so that management can make repairs, clean up and keep the unit in good shape. This can add up over the years: your time-share ownership lasts until you sell the unit. Even if you skip the trip one year, you still own your time and owe your fee. Maintenance fees aren't deductible on your tax return, any more than making repairs on your house gets you a tax write-off.
If you're a "deeded" owner -- you co-own the unit, not just a block of time -- the local government will hit you up for property tax. You can deduct property tax payments, under the same rules as you take it off on your primary home. Taxes based on the value of the property are deductible. Taxes that raise money for improvements that benefit the time share, such as new streetlights, are not.
For some time-share owners, ownership is a matter of business, not kicking back on vacation. If you bought your time share to rent it out, you have more options for deductions. Maintenance fees on a rental unit become a valid write-off, just as the cost of repairs and maintenance on a rental house are deductible. Property taxes based on value are deductible as a business expense, though property taxes for benefits still aren't deductible.
If you use your time share for fun, the only place you can take your write-offs is Schedule A, for itemized deductions. If you take the standardized deduction instead, you can't write off any of it. With an investment time share that you rent out, you report rental income and write-offs on Schedule E, so it doesn't matter whether you itemize. Usually if you end up with red ink from your time-share income, you carry it forward to next year.
- Photos.com/Photos.com/Getty Images
- Can I Deduct Work Expenses on My Tax Return Without Itemizing?
- Tax Deductions for Renting Out a Room in Your House
- How Much Do You Get Back for a Child on Your Taxes?
- How to Estimate Donation Values for Taxes
- IRS Tax Deductions for Church Work
- What Are Some Easy Deductions I Can Claim on My Taxes?
- Can I Claim Foster Kids on My Income?
- How Much of a Tax Deduction for Donating My Appliances?
- Can I Claim State Sales Tax Deduction if I Do Not Pay State Income Tax?
- 403(b) Tax Deduction Rules