Getting rid of a time share.

Not quite right. There is a time test and there is more to how much of a capital loss you may take. I don't recall the details but here's what I think is more accurate: - If you convert a timeshare used for persal use to rental use, I believe you must rent it out a minimum three of five years in order for it to qualify for tax losses. - If you bought the timeshare for investment purposes from the start it immediately is qualified for tax losses (if applicable). But this is not a simple matter of buying it, renting it once, then using it the second year, then selling it and thinking you will have a qualified loss. Even if you never used it, you are at risk when claiming a loss if you never made money when renting it out. I think there is an issue of creating a "business" which never makes money being classified as a hobby. i While the capital loss is limited to $3,000, carvana did not explain this to the detail required. If you have a valid capital loss on the timeshare (let's say $14,000 loss) that loss can offset various capital gains. Talk to a tax person to get better clarification. In the event the capital loss on the timeshare exceeds all your related capital gains, then the maximum additional amount of loss you may deduct on your tax in each year is $3,000. Then the remaining loss carries forward to the next year. So, a $14,000 loss with no other gains will take 5 years to fully deduct on your tax return. Any gains which the loss can offset will shorten this time period.

peterp151,

You say my comments were "Not quite right". Please point out specifically what I said that was not correct? I purposely kept my remarks brief to avoid again being called an "Edumacated Idiots".

Let me address some of the points you raised.

pterp: "There is a time test"

You did not offer details on the "time test". The time test has to do with whether the capital gain/loss is a short term or a long term gain/loss. This affects whether or not the gain, if any, is taxed at the current 15% - with some exceptions - until at least 2011 when the rate reverts to the 2001 rate in the absence of legislation. Anyone who needs more details on the "time test" is really in need of a tax professional.

peterp: "I believe you must rent it out a minimum three of five years in order for it to qualify for tax losse"

You are somewhat confused by the "three out of five year" presumption. The IRC code and related regulations require one to make a profit three out of five years to overcome the presumption that the activity is not in fact a business. Renting it but incurring a loss by renting it for less than the maintenance fee does not satisfy the profit test. The presumption that the business is in fact a hobby because one does not make a profit in three of five years can be overcome at the IRS audit, at the IRS Appellate level or in U.S. Tax Court by factual evidence that successfully rebuts the presumption. Having a presumption on your side in court means the other side has the burden of submitting evidence to rebut the presumption. For example, there is a presumption in the U.S. that a criminal defendant is innocent and the prosecution must overcome this presumption. The 3 out of 5 year profit test is not a rule but rather a presumption.

peterp: "i While the capital loss is limited to $3,000, carvana did not explain this to the detail required. If you have a valid capital loss on the timeshare . . . that loss can offset various capital gains"

I said, "The capital loss is offset against capital gains " . I concluded by saying , "Anyone . . . believing they can claim a capital loss on the sale of a timeshare should check first with their tax attorney or tax advisor or go to IRS.gov for more information. " I believe I said what you said in far fewer words. Again, I purposely avoided a detailed explanation but did refer any interested party to the IRS web site or a tax professional.

I think our goals, peterp, are the same and that is to "educate" but I have been accused of verbosity in the past and am working on making my comments much less detailed. Hopefully, my last word on this subject!

The time test is if you've used the unit for personal time, the unit must be rental/investment for 3 of 5 years in order for the capital loss to be deductible, which I said in my post. The hobby vs business conclusion is better addresses between each investor and their tax accountant or the IRS. I agree there are many avenues to realizing your timeshare as an investment to acheive a capital loss, I'd prefer to take an approach which the IRS is unlikely to challenge.

Unfortunately, the way I submitted my post it looks like I said "not quite right" to your first paragraph when I was more concerned about your sentence regarding the $3,000 cap on capital losses. It appears your posts suggests the maximum offset is $3,000 which I'm pretty certain you didn't intend to convey since the offest is limited to the amount of gains and the $3,000 is the limit after the offset, just as I didn't intend to convey my "not quite right" was in response to your first paragraph. You would have been better off saying something more similar to my last paragraph and I would have been better off saying I'd like to add more detail to carvana's post in regard to the $3,000 limit on capital losses.

Not true, the will sale at no charge to you with a 4 month listing, however you are still responsible for all dues and maintanence fees. They will transfer out of your name completely for $1299.

gayler5 wrote:

I keep sending a plea for help with selling my timeshare. I bought it in 2001 and have rarely used it. It's in a wonderful area and is a top of the line resort. The major hang-up is the maintenance fee.

I've tried renting it; making my RCI points available to any potential buyers...I have a very large number of RCI points.

I have been hopeful to sell before the end of Jan 2007....I am on disability and receive only $821/month so I could definitely use the money. As most of you know, some money is better than NO money

Thanks, Gayle

Hi Gayle

If still available, send me details and I might be able to take it off your hands.

Len

lenh4 wrote:

If still available, send me details and I might be able to take it off your hands.

RedWeek has no avenue by which Gayle (or anyone else) can contact you privately, yet if Gayle posts details of the ownership at issue here, it will then be considered an "ad". Ads are prohibited in the forums and it would likely then be promptly deleted.

I'm not a RedWeek moderator (and I don't play one on TV), but perhaps Lenh4 should edit his post to include an email address for Gayle to contact, if she sees the posting and chooses to respond...

Len, gayler5 no longer has an account on RedWeek. She asked to be removed.

Thanks, Marty

lenh4 wrote:

gayler5 wrote:

I keep sending a plea for help with selling my timeshare. I bought it in 2001 and have rarely used it. It's in a wonderful area and is a top of the line resort. The major hang-up is the maintenance fee.

I've tried renting it; making my RCI points available to any potential buyers...I have a very large number of RCI points.

I have been hopeful to sell before the end of Jan 2007....I am on disability and receive only $821/month so I could definitely use the money. As most of you know, some money is better than NO money

Thanks, Gayle

Hi Gayle

If still available, send me details and I might be able to take it off your hands.

Len

Does anyone know anything about RCI Innovations? Are they a legitimate company. Said they had a buyer for our timeshare and would give me a letter stating that if we did not get the amount back within 6-8 weeks, we would get a full refund; however, we have to pay them first! What do you think?

anyone you pay-upfront....may or may not sell your unit. I did sell mine through Redweek, in less than 30 days.

susieh25 wrote:

Said they had a buyer for our timeshare and would give me a letter stating that if we did not get the amount back within 6-8 weeks, we would get a full refund; however, we have to pay them first! What do you think?

Since you've asked, what *I* think is that you should take a few minutes to read through the many posts about Global Resort Management in this very same General Discussion forum. EVERY word stated there about Global Resort Management applies exactly and equally to this other obscure bunch of parasites called RCI Innovations (... whoever and wherever they may be). Rest assured that they DON'T have a waiting buyer, somehow salivating at the opportunity to buy YOUR particular timeshare. And no, they won't EVER give you ANY money back if you are foolish enough to willingly give it to them in the first place.

I don't mean to sound harsh, but these are the cold, hard FACTS, pleasant or not, although I know you'd like to believe otherwise.

These types of "upfront fee" parasites are seemingly endless in number, with new ones crawling up out of holes in the ground all the time (...often it's the same players with a new name, having closed own their last "upfront fee" operation). The game is always the same --- pay us an upfront fee and we will "advertise" (...but never actually sell) your timeshare for you. Don't fall for it. If you do, you are not a "victim" --- just another willing volunteer.

So, DON'T VOLUNTEER!!!

Actually, it was RCI Innovations she was referring to, but never, ever pay any company a large upfront fee to 'supposedly' sell your timeshare no matter what money back guarantee they offer .... after 6-8 weeks they will no longer answer your calls or your calls will go to voice mail or they will tell you that the employee that worked with you no longer works for their company and they can't help you .... they're all scams.

marys645 wrote:

Not true, the will sale at no charge to you with a 4 month listing, however you are still responsible for all dues and maintanence fees. They will transfer out of your name completely for $1299.

Apologies first of all since there were multiple conversations going on, but is your reference above in regards to Charitable Donations? I did notice that when I submitted my information there was a charge or I believe $1,299 depending on which option you selected. I submitted the form late so I'll contact them in the morning to see if they are still taking certain timeshare properties, providing they are free of mortgage and maintenance fees. I truly appreciate the valuable info we get from these forums. Thanks

I had a similar experience. A representative from Prudental West offered to take over my timeshare for $3900 and relieve us of the MF, etc. My wife inherited the timeshare and yet we are told if we let it go back to the timeshare company because of non payment of MF it will hurt our credit and we be "hounded" by collection types. the timeshare is really worthless due to the MF and possible assessments and increases in MF. Many are on ebay for $1 as you know. Prudential West if supposed to moved the timeshare over to anoher company which would handle to MF, etc. They wouldnot diclose who they move it to. Is this legit? It would be worth it to just get rid of the timeshare. Charles

If your client could divest himself of the timeshare and the liabilities that go with it, it might be worth paying them to do so. Am I not correct to say that if that take his money and then do not legally transfer to timeshare to another entity then this would be a scam. I was approached with a similar deal and it would be worth it to me to pay someone to take the timeshare off my hands because of the MF,etc. You many know the answer to this? If I leave a timeshare to my children they are then stuck with assuming the liablities where that want the TS or not. If they refuse to inherit the estate cant be closed out.

charless452 wrote:

Prudential West if supposed to moved the timeshare over to anoher company which would handle to MF, etc. They wouldnot diclose who they move it to. Is this legit? It would be worth it to just get rid of the timeshare.

Charles:

I have no idea who, what or where "Prudential West" might be, but on the presumption that they are just another PostCard Company, I strongly suggest that you read up (...very easy, by searching these forums for numerous posts on the subject...) on the critically important distinction between an actual transfer of ownership by official recording of a new deed in a new name vs. the uncertainty of a mere "Power of Attorney". New, valid recorded deed in a new name promptly and legally rids you of ownership and all associated responsibilities. However, a PoA rids you of NOTHING until and unless it's (...only maybe) resold or given away later (...if ever) with a new recorded deed in a new name. Please make certain that you VERY clearly understand the difference between the two if you're considering paying out thousands of dollars. There is a genuine risk of getting "stung" if you sign a PoA --- yet STILL ultimately get left with the ownership and ALL of its' obligations, regardless of all the money you may have paid to a PostCard Company.

We just discussed this with a very well known attorney. He stated that our children will not be liable for anything that is not put in our trust. Therefor when you arrange your trust leave the timeshares out. Then the liability will die with you. Our children will only want/afford one of our timeshares out of the 6 we own. Therefor we'll only put that one in the trust and leave the others out. The liability for them dies with us.

Traveler,

Either you did not share all the facts with your "very well known attorney" or he is operating outside his area of expertise. I suggest you contact an attorney who is Board Certified in Estate Planning and Probate Law for a more reliable answer to your legal question.

It seems you are confusing the term "trust" with "estate". If you are actually referring to a trust then it must be a testamentary trust that is funded at the time of your death. That is, you now own six timeshares and one will pass to the testamentary trust at the time of your death under the terms of your will. The other five timeshares if ignored in the body of your will become part of the residue of your estate and will pass to the legatees of the residue. If the legatees of the residue are not named in your will then the timeshares will pass to your children. They can disclaim ownership if done timely but if not the timeshares are theirs. The executor at this point will be under a fiduciary responsibility to transfer the legal title to the timeshares by deed to your children and to notify the timeshares management of the title change. The executor is also responsible for paying all maintenance fees due at the time of your death.

If the executor elects to ignore this responsibility which is not uncommon with respect to timeshares the timeshares management could file suit against the executor forcing him to act.

Your statement that the "liability for them dies with us" is totally inacurrate. A lot of people believe this but it is not true. The estate is responsible for the liabilities of the decedent. An insolvent estate may not pay all liabilities but the liabilities do not suddenly just go away because of the death of the debtor. Any "very well know attorney" who is familiar with probate law will verify the accuracy of my comments.

I also do believe the timeshare will have to be taken care of by your children in the event of death. It becomes their responsibility. We donagted to Florida Veterans Association and we had to pay 499.00 for the transfers etc but they did take it off our hands and it was better to do that than pay the 680 in a few months for the maintence fees. We did this last year and we didnt see a bill in dec plus i called to see if it was in our name and it wasnt. So glad we did this as now another year is approaching for the maintence fees. It took a few months but it was done.

I went thru a rather bloddy estate battle over the last 5 years and while I'm not an Atty, I certainly read a lot. technically, anything at all owned by the decedent which carries a creditor type responsibility is the responsibility of the estate.

So on the one hand, even if all assets are in a living trust except the timeshares, the trustee of the estate (who is probably also the trustee of the trust) has a fiduciary and legal responsibility to address the timeshares. The timeshare companies have a legal right to bring their creditor claims to the estate and receive appropriate compensation. I say this initially in regard to annual maintenance but it also applies to foreclosure as well.

What will probably happen if the trustee does not address the timeshare creditors?

Legally I believe this is what could happen: - Creditors can petition the court to fulfil remedy from the estate, even by clawing back any funds ditributed to beneficiaries. It would be an extremely rare situation where a trust and wills had been correctly designed to block timeshare assets and liabilities from the remainder of the estate. In my experience, most people will not spend the money nor have the ability to determine if the lawyer they hired properly configured their estate to achieve this goal. In my opinion, you would spend more money on the lawyer than the cost of the timeshares and timeshare liabilities, then after you passed your estate could spend even more than that on the atty defending against the timeshare claim on the estate. And if the atty who drew up the trust and wills did not do the job correctly (as in the case I experienced), you threw money out the window and will never know about it. - Placing "all" assets in a living trust except timeshares will most likely not protect the trust assets. Most estates use pour over wills to move all non trust assets into the purview of the trust. This is to cover the control of personal assets which usually can't be recorded as a trust asset, and keeps those assets out of the probate process. Assets which usually are not included in trusts are cars which people tend to not buy as a trust asset, many bank accounts are often not placed into trust ownership - especially ones opened after the trust is created, and all the little personal items such as jewelry/furniture/collectibles. - Even if the timeshares were excluded, if those companies went to probate court to lay a claim, the estate would incur legal expenses defending against the claims. "But since there are no assets, they can't get any money" you say. Think about it. A creditor whom you think you have complete protection from goes to probate court. That creditor has a lot more money to spend on lawyers. Do you really think you can get away with walking into probate court and show the judge a trust document and think the judge will dismiss the case? You're going to incur legal fees no matter what if the creditor files in court.

But here's what I think would happen: - You ignore all notices from the timeshare companies. Eventually the timeshare is foreclosed on. I think given that the owners are deceased, no one will spend time taking legal action to claim any unrecovered amount owed. It will cost the timeshare or collections companies too much money than the amount owed and they'll write it off. - the best example I have is about an RV in the estate conflict I was in. The trustee chose to "keep" the RV for herself even though it was designated to go to the decedents' children. Granted, the children didn't want the RV since it was worth $50k and there was a loan of $75k attached to it, but the issue is about the net $25k owed on the RV. The decedent pays the RV loan for two years, then notifies the lender (without telling the children) she will no longer pay and allows the lender to reposess the RV. By this time there is $15k the lender doesn't recover. technically the trustee never notified the lender of the decedent's death. IMHO this means a 1 year statute of limitation never ran out since it required the trustee to notify the lender of the decedent's death. At one point the children notified the lender of the decedent's death, but the lender only used that notification in an attempt to extract money from the children since that lender had already failed to convince the trustee to pay. the lender never went to probate court to secure or claw back any funds from the trustee or estate.

I looked into the "donate for a cause" website and found two options available. The first is free but is contingent on selling the timeshare within four months. If I have been unable to sell mine in ten years, I doubt there is a company, charitable or not, that can sell it in this short time frame. The second option is guaranteed, but would cost just about as much as what timeshare relief would cost me. I think I am going to go with timeshare relief and will let you all know whether or not I am satisfied. Dan