Is a Time Share Real Property?

Is a Time Share Real Property?
••• Steve Mason/Photodisc/Getty Images

Timeshare owners can reap the benefits of owning a vacation home, without the responsibilities of year-round maintenance and upkeep. In addition, some people are attracted to the potential investment opportunities associated with timeshare ownership. Before you purchase a timeshare, however, there are some important details you should take into consideration.

Timeshare Basics

Typically, timeshares are resort condominiums that a developer has secured the legal right to sell in incremental stays. There are two types of timeshare ownership: deeded, where your interest is considered to be real property, and non-deeded, also known as a "right to use" arrangement. A deeded timeshare can be rented out, sold or willed to your heirs, but your use generally is limited to the same unit at the same time each year. A non-deeded timeshare agreement lets you lease the right to stay at a property. Under this type of agreement, the developer maintains ownership of the real property, and your right to use the property typically is limited to somewhere between 10 and 50 years.

Investment Potential

A timeshare is not a competitive investment when compared to other real estate options, such as vacation homes. However, timeshares can help you save on travel expenses, making it possible to travel more frequently. Most timeshares are more spacious than a hotel room, and often include a kitchen and resort amenities like pools and tennis courts. In addition, your timeshare's property taxes and mortgage interest may be deductible on your income taxes; however, you should consult with your tax professional for advice in this regard. When purchasing a timeshare, the true value depends on your lifestyle, preferences and vacation goals.

Current Market

According to Kiplinger, most timeshare resellers can expect to recoup 30 to 50 percent of what they paid for their units. In addition to the depreciation, sellers should be cautious when dealing with companies that charge upfront fees but fail to sell the unit. If you've grown tired of your timeshare, a timeshare trading network may help you swap your timeshare unit with another, or trade your time for points to use towards hotels, cruises and other travel products.

Before You Buy

If you've decided that a timeshare's right for you, the Federal Trade Commission recommends you follow due diligence. You should carefully evaluate the location, resort and units and be optimistic about vacationing there regularly. In addition, you should research the sellers, developer and management company to ensure they are reputable. If you're on the verge of signing a contract, get the details regarding your right to cancel. If you do cancel, send notification to the seller by certified letter.