Donating Your Timeshare
By Rosalie E. Leposky
Trying to get rid of a timeshare unit you don’t want can be a hassle. If you don’t want to abandon it and lose its entire value, you have several options. Searching for a reseller may expose you to scam artists who compete with legitimate firms for your attention and business, and an auction sale entails some costs and a commitment of your time to offer the property. Both methods are likely to yield – with only rare exceptions – only a small fraction of your original purchase price.
Another possibility is donating your timeshare to charity and taking a tax deduction for the donation. This works only if you can find a charity willing to take the timeshare off your hands – and that’s a pretty big if. The process is also complicated. To streamline it, two pioneering intermediaries – Timeshare Donation Network and Timeshare Travel – have set up shop to help timeshare owners make their donations.
Timeshare Donation Network
Linda Kuehl, CPA, a former controller for Thousand Trails and previously a licensed Realtor in Seattle, Washington, founded Timeshare Donation Network (TDN) three years ago through the sponsorship of the German Language School for Children in Seattle.
“My family owns five timeshare units, and when we learned about the Timeshare Users Group (TUG) bulletin board I saw that someone wanted to donate a timeshare unit to charity,” she says. “The idea appealed to me, and I thought we could do it. “Worldwide, there are over six million timeshare units. If the owners of one percent of those units considered donation, the numbers would be staggering,” says Kuehl. “After dealing with resale scams and spending up-front money to sell their timeshare units, owners are happy that we pay all fees and they can walk away. Some don’t even want the tax deduction. Many Canadians and some United Kingdom owners just want to walk away.”
Even after the terrorist attacks of September 11, 2001, many charities – including the Red Cross – would not accept a timeshare donation. Kuehl’s first charity client was German Language School for Children in Seattle, where her daughter was a student. Now inquiries about donation come from individual owners, resellers on behalf of their clients, and resorts.
How The Process Works
Many timeshare units aren’t worth a lot of money, and transferring ownership of a deeded timeshare takes almost as much work as transferring ownership of a house. In addition, the annual maintenance fee has to be paid, and usage is time-sensitive, a problem that doesn’t exist with regular real estate.
Unless the charity wants to use the timeshare for recreational purposes, it must sell the donated property to raise funds. The units TDN receives are worth about 10 percent of their original purchase price. They range in value from about $500 to several thousand dollars, with the majority worth around $2,000. “We usually don’t do a title search,” Kuehl says. “If the buyer wants to do a title search, it can add up to $400 to the timeshare unit’s cost. To be sure we have a clear title, we have the timeshare unit deeded over to us.
“We started slowly, with about six units our first year. Now we handle about 300 timeshare units a year. In a typical week, we get 10 new timeshare donations. We receive timeshare units all over the calendar, but most of our units come to us toward the end of the year when people receive their maintenance fee statement and don’t use or bank their weeks. The donation is made when they are thinking about their year-end tax deductions.”
TDN sets the market price of units it receives, at prices comparable to those on auction sites such as e-Bay and RedWeek.com. The latter is a dot-com company owned by Randy Conrads, who created Classmates.com. RedWeek offers two forms of usage – free guest benefits with limited use and a $10 one-year membership program for buyers and sellers. “We sell donated timeshare units from our Web site and work with resellers,” Kuehl says. Kuehl hopes to expand TDN to include other small nonprofit organizations. Its second charity is The Northwest Choirs, parent organization of Northwest Boychoir and Vocalpoint! Seattle. Contributors may indicate what charity they want to donate to.
“Thus far,” Kuehl says, “we’ve received properties in the United States, Canada, Mexico, the Caribbean, and Austria.” A Selective Solution TDN accepts donations of deeded and right-to-use unit-weeks, and points, but won’t take every timeshare that is offered. “When we do accept a unit,” says Kuehl,” we pay the transfer fee and the cost of redeeding. We take ownership of the timeshare and notify the resort. Much of what we do is driven by Federal tax laws.”
The IRS rule on non-cash items is fair market value on items worth up to $5,000, without the need for an appraisal. Over $5,000 requires a certified appraisal dated within 60 days of the donation (a challenge in itself for a timeshare unit, if no comparable listings can be found on industry Web sites).
The taxpayer making the donation takes it on Form 8283 in the year of the donation. If the charity sells the property within two years, it must give the person who donated the unit another form showing the date and amount of the sale. “This is the IRS way of ‘circling the wagons,'” she explains. “A lot of people are not willing to go through this hassle. Almost everyone we work with stays under the $5,000 threshold.” Moreover, tax rules limit the total donations that a taxpayer can make in a single year, so if a family has several units to donate, Kuehl advises them to donate one unit a year for several years. Kuehl says she has been surprised at the reasons why people come to TDN to make donations.
“We expected the elderly, long-time owners, and people tired of timesharing. Instead, we’ve found people who give us their units, and buy others from us that meet their current needs. Our prices are reasonable. One of our clients bought one of our e-Bay units, and now the rest of his family are buying units from us.” Buyers normally play closing and deed costs, usually ranging from $250 to $300. In addition, some resorts charge a transfer fee. Timeshare TravelAccountant James “Jim” Jewkes founded Timeshare Travel, a resale marketing firm based in Salt Lake City, Utah, in 1984. It has accepted timeshares for donation to charity for more than a decade.”
The value of the donation doesn’t matter,” Jewkes says. “Some timeshare units make better donations than others. Ideally, they should be in the United States or Mexico, have low maintenance fees, and be one-bedroom or larger. Most of the donated timeshares come from the smaller older timeshare resorts.”Timeshare Travel accepts a timeshare donation in the owner’s name, donates the unit to a charity, then buys it back from the charity and sells it. The firm imposes no service charge to handle a donation.
“Timeshare donations are a win-win situation for the owners, many of whom can get a tax write-off worth up to 30 percent of the fair market value of their donated timeshare. The charity wins because we buy back the unit, and we try to resell it. The risk is with us, because we may have to sit on the property and pay the annual maintenance fee for a few years.” Charities to which Timeshare Travel donates include:
- The national Children’s Miracle Network, through its Provo, Utah, office.
- The Portland, Oregon, office of the national Multiple Sclerosis Foundation.
- About a dozen smaller religious charities and homeless shelters around the U.S.
“We ask sellers to pay the closing cost for the donation,” says Jewkes. “Each donation is handled like all regular timeshare resales with a recorded paper trail. We do about a dozen charity donations a year. We donate the unit to charity, and then buy it back. We have helped one charity raffle off a timeshare unit.” Who should consider timeshare philanthropy? “Anyone in a higher tax bracket where the tax incentives are good. Not someone on Social Security or unemployed,” says Jewkes.
Timeshare Travel also will combine donations of timeshares with a trade-in-for a larger unit in the same destination area or in a different area. For More Information: