An option to selling your timeshare is to donate it to charity. There are a number of charitable organizations interested in these units as a way to raise money for their causes, but in order to do this, your loan needs to be paid off.
Many people have the false impression that donating their resort unit to charity will result in a tax benefit greater than what they could get for what they own on the open market. While there may be limited instances where this is true, as a general guideline you’ll receive more money selling it yourself rather than you will ever get donating it to a charity.
The one big exception to this is if you have to spend a lot of money in fees / commissions and advertisements to sell.. Advertising your property can significantly reduce the amount of money you see from the sale of the resort unit.
While selling yourself will likely mean more money for you in the end, there are some appealing aspects to donating it rather than trying to sell it yourself.
The advantages of donating to a charitable organization are:
No Upfront Costs To You: Most charities don’t charge a fee when you donate a property of this type. If you sell on your own, you will have to pay for a variety of services such as advertising, legal fees and reseller fees / commissions.
Quick: The process is taken care of in a quick manner (usually totally completed within a few months). This means that you don’t have to continue to pay maintenance fees, taxes and special assessments while it sits on the market for awhile.
Tax Write-off: While the tax write off won’t generally result in as much money for you as if you sold the unit yourself, you will still be able to claim the fair market value of it against your taxes.
Few Hassles: Since the charity will take care of the transfer process for you, the hassles of taking care of this on your own are solved.
Time: Selling a timeshare on your own can take a lot of time and energy. You save this when you donate to a charity.
When making a donation to charity, you will need the following information to ensure a smooth transfer of the property to the charity:
- The name, address, and phone number of the resort
- The deed or certificate
- The contract or membership agreement
- The financing agreement, if you’re still paying for the property
- The information to identify your interest or membership
- The exchange company affiliation
- The amount and due date of your maintenance fee
- The amount of real estate taxes, if billed separately
By having all this information, it will speed up the process of the transfer. While most charities will work with you if you’re missing some of the information above, it can cause delays in getting the transfer completed.
You are allowed to deduct the “Fair Market Value” of your resort unit on your taxes if you itemize your tax return. Once the transfer of ownership to the charity is complete, your chosen charity will send you a receipt as proof of your donation. The receipt usually will not have a value on it – the fair market value is determined by you and your tax preparer, but you must get an appraisal for the unit if you decide to claim the fair market value of it as above $5,000. Note that these appraisals can be quite expensive with most costing more than $500. If you need to get an appraisal for tax purposes, get it in writing that the appraiser will guarantee their appraisal in tax court. You can more information regarding charitable donations at the IRS Website (View charitable donation information in HTML format).
Timeshare owners also frequently want to know if they can donate the use of the unit for one week to charity. This tax question usually arises when for some reason the owner is unable to use or rent out their week and will lose it. Unfortunately, the Internal Revenue Service doesn’t allow a deduction for a gift of “right to use” on these properties, so no tax deduction is allowed.