How to Report a Timeshare Sold for a Loss

by Paul Merchant ; Updated July 27, 2017

A timeshare is shared ownership of a property that allows each owner a definite period to reside in it. Timeshare loss is the difference between the tax you paid and the selling price of the timeshare, less the expenses incurred in the sale. A timeshare is treated like any other ordinary asset by tax laws and any loss incurred in the sale of timeshare is not subject to income tax deductions. However, you may be granted an exception and your loss considered deductible if you provide sufficient proof that your timeshare was a business that involved renting out your portion of the timeshare on a regular basis. As such, occasional use of your week for rental, using it for business during your annual vacation and renting it out in the year of sale are not considered to constitute tax-deductible business or investment activities.

Reporting Timeshare Sold at a Loss for Personal Use Property

Step 1

Take Form 1099 that you received from the IRS and detail the gross sale of the property in Schedule D of the form. Your gross amount should be the value of the sale of the timeshare before subtracting expenses such as commissions, advertising and closing costs you incurred in the sale.

Step 2

Take your income returns form and fill out the reference number of the Schedule D in your Form 1099. Enter the same amount of gross income of the timeshare that you entered in Schedule D in your income tax return.

Step 3

Subtract the expenses such as commissions, advertising and closing costs you incurred in the sale from the gross amount of sale to show the net loss that you have incurred. Post this net loss figure in your tax return as well. You can either post an equivalent figure to offset the loss figure to zero or leave the figure as it is, given that your week does not qualify for deductions.

Reporting Timeshare Sold at a Loss for Rental Property

Step 1

Take Form 1099 that you received from the IRS and fill out the gross sale of the property in Schedule D of the form. Your gross amount should be the value of the sale of the timeshare before subtracting expenses such as commission, advertising and closing costs you incurred in the sale.

Step 2

Take your income returns form and fill out the reference number of the Schedule D in your Form 1099. Enter the same amount of gross income of the timeshare that you entered in Schedule D in your income tax return.

Step 3

Subtract the expenses such as commission, advertising and closing costs you incurred in the sale from the gross amount of sale to show the net loss that you incurred. Post this net loss figure in your tax return as well.

Step 4

Add the total value of receipts that include the cost of final sale, maintenance fee over the years you owned the property, advertising costs and evaluation charges if any were carried out to get the total tax deductions to be claimed.

Step 5

Attach the rental receipts and other documentation that verify that you rented out the property for not less than a month or documentation that shows your intent to rent the property, for example advertisement receipts.

Tips

  • Seek the services of a tax specialist in determining the extent to which your timeshare qualifies as a business or investment activity.

About the Author

Paul Merchant started writing in 2005. His articles have appeared in “JSTOR Journals” and “Wileys Management Journals.” He is a certified public accountant and a qualified project management expert. Merchant holds a Bachelor of Arts in communication from the University of Nairobi.

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