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How to Get Timeshare Tax Benefits and Deductions

Timeshare tax is an interesting business. The best advice you can receive is from a professional because there are many things to consider.

Local Purchase Taxes:

When you purchase the timeshare you will need to pay the local tax, and this will differ depending on where you purchase. For example, Mexico has a tax called IVA and this is a 10% tax. In Canada there will be a federal sales tax and a local sales tax and these will differ depending on your province of purchase. If you are purchasing directly from the developer you may be able to negotiate a deal where they include the tax in the purchase price.

Local Selling Taxes:

If you are selling your property, there will be taxes applicable to this transaction as well. Once again you will need to check the local taxes of the area depending on where your property is located. The deductible part of the sale is on the profit that you receive from the sale, so if you are selling for what you purchase or less you will not need to pay taxes because it will be considered a loss.

Yearly Tax Deductions:

If you are renting your timeshare, your yearly maintenance fee may be tax deductible, but if you own a timeshare, maintenance fees are not tax deductible.

Payment Timeshare Interest Taxes:

If you are still making payments on the initial purchase price of your timeshare then the interest you are paying is probably taxable as well. For the tax deductions to apply to your loan interest payments the loan must be a secured loan by the financed property.

Taxes on Multiple Weeks:

If you own multiple weeks or multiple ownership, you are only allowed deductions on one week. This may be on one week per property or one week total.

Rental Income:

Depending on your tax status you may be taxed on rental income. This of course is dependent on whether you are declaring this income and how much income you are making.

Property Taxes:

If the property taxes are billed separately from the maintenance fee then these will be deductible as well. If they are included in the maintenance fee then you will not have the paperwork necessary to file this claim.

Donation to Charity:

If you are deciding to donate timeshare to charity instead of selling the property then you will be entitled to a tax rebate for the fair market value of the property. To determine the fair market value of the property then you will want to get an appraisal done to determine the value of your ownership.

Tax deductions in relation to timeshare is a difficult business, as always is the case with taxes. If you have your own accountant then ask him for advice regarding this, or consult any accountant. Also, you may want to consult timeshare rental and/or resale companies to determine what, if any, tax rebates that you are eligible for.