There's more than one way to own a timeshare. True "deeded" ownership gives you a legal title to the property, usually as one of multiple co-owners. Along with the right to stay there at a certain time each year, you can rent your timeshare out or sell it. With "right to use" ownership, on the other hand, you don't own the unit, just the right to stay there during your reserved time interval.
If you have deeded ownership, the local government may bill you and the other owners for a share of the property tax due on the unit. Depending on state law, you may get a property tax bill in the mail, or you may pay it as part of a package along with your other fees. Some counties bill the timeshare developer, in which case you don't pay the fee directly. If you're not a deeded owner, there's no property tax.
If you aren't deeded, you needn't worry about insurance. It's the timeshare resort that owns the unit and has to pay for coverage. If you do own the property, insurance isn't mandatory, but it may be safer. Anyone who injures himself on your timeshare property can sue all the owners for damages. Taking out liability insurance protects you. Homeowners insurance for the unit also pays if it's damaged and you have to contribute to rebuilding it.
If you pay some of the property tax, you can write it off as an itemized deduction on Schedule A. The IRS allows you to deduct property taxes based on the actual value of the unit. Taxes used to pay for improvements -- lights along a neighboring street, say -- are not deductible. If you don't itemize, you can't claim a write-off. You can't deduct homeowners insurance at all unless you're using your timeshare to generate rental income.
If you own your timeshare partly or primarily as a rental investment, you may be able to write off your tax and insurance payments as a business expense. Because of the fractional ownership, qualifying for the deduction can turn out much more complicated than if you own a rental house. If you can take the deduction, you deduct rental losses from rental income on Schedule E, then report the results on Form 1040.
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