Donate for a cause

I've been dealing with DFAC for a few months now. I have several timeshares, but one I am interested in unloading. DFAC initially tries to sell your timeshare. Once unsuccessful, they pitch their programs emphasizing the tax write-off advantages at a cost of $2600 dollars. I still need to pay my maintenance fees putting me over 3K to exit. After consulting with my CPA, I told DFAC that I wasn't going to go through with the program. DFAC is now threatening me with a bill for costs incurred at around $400-500. I thought I would check here before I consult my attorney. Any suggestions?

It's a scam. They claim you can deduct a huge amount for your donation. That's false you can only claim the actual value of the item donated. Since most timeshares have little or no value then your deduction is nothing. If you didn't sign any agreement with them you owe them nothing. Tell them to pound salt.

My name is Virginia I am the President of Donate for a Cause. I would like to clarify exactly what is going on here. We have a couple of options for some timeshare owners that have properties that might still have some resale value. These properties change on a daily basis because as you know, the resale market changes on a daily basis. We recently took your ownership in for donation for free of charge based off our previous sales experience with that particular resort. Once it was listed for sale we could not even secure an owner that was willing to pay the closing costs in addition to a very small sales price of $100. There was not a single buyer that inquired about the property. When this is the case, we have to look at the timeshare we are marketing for sale and see if it is worth it to us to keep trying to sell it. In this situation it was not.

At that point the donor has an option: pay to complete the donation since we cannot find a buyer willing to do so or keep the timeshare. If the donor chooses to pay the fee and sign the contract to get everything completed (which you did), the deed will then be recorded into our non profit (removing the donor from title) until we can secure a new owner. The donor must pay the fees to the escrow company before the deed will be recorded to us since we are taking over the liability with a legal title transfer. You chose to continue with our Guaranteed Program in November (signed contract on November 5th) at which point you were invoiced. After several calls from both your Donation Specialist and the closing agent we were informed you no longer wished to continue.

The escrow company worked on your donation for several months beginning back in August and finally ending in January when you informed us you no longer wanted to donate. You were then invoiced for all of the work done since you decided to back out of the contract. Not only did the escrow company draft the deed, complete a title search, and contact the resort for all of the information regarding your ownership, but the brokers tried to sell it for six weeks to no avail. Per your contract, you are responsible for these fees. We understand that things sometimes come up and donors are not able to complete the process, but please understand at the same time that if you do not pay the invoice that was sent to you our charity will have to.

virginiab134 wrote:

My name is Virginia I am the President of Donate for a Cause. I would like to clarify exactly what is going on here. We have a couple of options for some timeshare owners that have properties that might still have some resale value. These properties change on a daily basis because as you know, the resale market changes on a daily basis. We recently took your ownership in for donation for free of charge based off our previous sales experience with that particular resort. Once it was listed for sale we could not even secure an owner that was willing to pay the closing costs in addition to a very small sales price of $100. There was not a single buyer that inquired about the property. When this is the case, we have to look at the timeshare we are marketing for sale and see if it is worth it to us to keep trying to sell it. In this situation it was not.

At that point the donor has an option: pay to complete the donation since we cannot find a buyer willing to do so or keep the timeshare. If the donor chooses to pay the fee and sign the contract to get everything completed (which you did), the deed will then be recorded into our non profit (removing the donor from title) until we can secure a new owner. The donor must pay the fees to the escrow company before the deed will be recorded to us since we are taking over the liability with a legal title transfer. You chose to continue with our Guaranteed Program in November (signed contract on November 5th) at which point you were invoiced. After several calls from both your Donation Specialist and the closing agent we were informed you no longer wished to continue.

The escrow company worked on your donation for several months beginning back in August and finally ending in January when you informed us you no longer wanted to donate. You were then invoiced for all of the work done since you decided to back out of the contract. Not only did the escrow company draft the deed, complete a title search, and contact the resort for all of the information regarding your ownership, but the brokers tried to sell it for six weeks to no avail. Per your contract, you are responsible for these fees. We understand that things sometimes come up and donors are not able to complete the process, but please understand at the same time that if you do not pay the invoice that was sent to you our charity will have to.

I was under the impression that Donate For A Cause would take no timeshare that they couldn't turn around and sell .... then why did you take his timeshare?

Also, another question that's been on my mind concerning Donate For A Cause ..... why do you charge such a large upfront fee before even trying to sell a timeshare? Wouldn't it be better to charge the fee after the timeshare is sold rather than before .... I do understand that there are listing fees on Ebay that you could charge the donor before posting it, but I don't understand the other large upfront fees when the timeshare hasn't yet been sold?

We have a list of ownerships we will not accept under any circumstance because we know that we can not sell them or the resort refuses to work with third parties. We can sell this ownership, but not to anyone that is willing to pay the closings costs which is what we were trying to do to keep the donor's out of pocket expenses to a minimum. As the charity is it obviously not in our best interest to pay all of the closing costs on a property that will most likely sell for less than $500. The only option at that point: have the donor pay the fees if they want to complete the donation.

The fee we charge is not upfront, it is due at closing. Closing is when the deed is signed over to our charity. As stated in my previous response, we are taking on a liability. Keep in mind our goal here is to raise money for charity while helping people out of their ownerships.

Most people that contact us are interested in getting out of their timeshare quickly which is why we transfer the deed into our company while we find a new owner (under our Guaranteed Donation Program). Obviously if we are going to take the deed over, we need to know that the closing costs transferring the timeshare back out of our name are covered, which is why we charge the fees at the time we take over the deed.

Virginia while we have you in the forum I would like you to comment on the tax deduction a lot of charity companies are claiming. Most of them tell the timeshare owners that they can take a $ 5,000.00 deduction off their income taxes for donating the property. The IRS ruling is that you can only deduct the actual ammount the item sold for. What does your company say about the deduction to your clients ?

Please review Publication 526 with the IRS regarding donations over $500 but below $5,000. For information regarding any deductions claimed over $5,000 you can reference Publication 561. It states "Generally, you must obtain a qualified written appraisal of the donated property from a qualified appraiser. "

It is optional to the donor to have an appraisal completed during the process and it is also up to the donor and their tax adviser to determine what they claim on their taxes. If they choose to have an appraisal done as part of the process a copy of the appraisal is sent to the donor with the tax documents to provide to their accountant. Donors can use their own independent appraiser or pay $150 to have one completed by a certified appraiser we work with. The $150 paid for the appraisal is tax deductible on a case by case basis depending on the donor's individual situation.

We are not tax professionals and do not give out tax advice. We encourage our donors to contact their accountant or tax preparer before donating to see if it is something that will be beneficial to them.

Good answer

virginiab134 wrote:

Please review Publication 526 with the IRS regarding donations over $500 but below $5,000. For information regarding any deductions claimed over $5,000 you can reference Publication 561. It states "Generally, you must obtain a qualified written appraisal of the donated property from a qualified appraiser. "

It is optional to the donor to have an appraisal completed during the process and it is also up to the donor and their tax adviser to determine what they claim on their taxes. If they choose to have an appraisal done as part of the process a copy of the appraisal is sent to the donor with the tax documents to provide to their accountant. Donors can use their own independent appraiser or pay $150 to have one completed by a certified appraiser we work with. The $150 paid for the appraisal is tax deductible on a case by case basis depending on the donor's individual situation.

We are not tax professionals and do not give out tax advice. We encourage our donors to contact their accountant or tax preparer before donating to see if it is something that will be beneficial to them.

This is old IRS rules before the 2007 recession hit when timeshares did have value .... currently few have much value, especially $5000 value (with the exception of those few listed below) .... the IRS states that the it's the FAIR MARKET VALUE of a timeshare that can written off .... if you donate a worthless timeshare to a charity then the fair market value would be zero.

There have been other questionable charities that have come here trying to state 'the IRS charity tax code', but if you are telling clients they can write off $5000 without an appraisal then the IRS will come after them along with penalties and interest several years later, because they realize that very few timeshares are worth $5000 at present (exceptions may be Disney, Hilton, some Marriotts, 4 Seasons, Hyatt etc).

Read below for more info on timeshare deductions and the IRS:

http://redemptionandrelease.com/timeshare-donation-reviews/

Case in point regarding the IRS .... my dad died in 1992 .... I was his 'power of attorney' and handled all his business affairs. I was not aware that he should have had to file income taxes = social security income while he was in a nursing for 7 years.

Several years after his death I received a statement from the IRS stating that my dad owed several years of back taxes while he was in the nursing home. This included back taxes, penalties and interest .... many times it takes IRS auditors several years to catch things like this.

I called and spoke to an IRS rep and informed him that I had no idea that I (being his power of attorney) should have filed my dad's income taxes while he was in a nursing home. The rep understood and wrote off some of the penalties and interest.

What I'm saying here is that it can take YEARS for the IRS to catch people writing $5000 off their taxes for donating a worthless timeshare like it took years for them to inform me of my dad's tax situation..

The IRS states you have to treat the timeshare market as a whole meaning the Fair Market Value is determined based off of not only what the developer is selling units for but what they are selling for on the resale market. Just because timeshares do not always sell for a lot on the resale market does not mean they are worthless. The developer is still selling units for tens of thousands of dollars. The only way to do an accurate analysis of the value of the property donated is to have an appraisal completed, by a certified appraiser, taking into consideration the ENTIRE market (developer and resale).

This link you have provided appears to be affiliated with a timeshare rescue company. Are you affiliated with this company? How much is charged to take over a timeshare? I have looked into many of these companies over the years and in most cases they are deeding ownerships into fake people's names and fake companies to remove owners from title. While the owner is left happy they no longer have a timeshare, what ends up happening is the remainder of the owners are hit with increased maintenance fees and assessments due to these "companies" defaulting on their accounts.

The IRS will not allow a deduction based on an appraisal. That went out the window years ago. The person filing their taxes must prove the value of what the item sold for not what it was appraised for. If that were the case everyone would pay for a phony appraisal and take a huge deduction. Like Jayjay stated they will come after you years down the road demanding interest and penalties. I would not be able to sleep at night knowing I took a huge deduction that could come back to haunt me.

I liked your answer about looking into the tax code but I definitely feel you are way overstating the appraisal scam. This scam is used by phony charity companies asking for large upfront fees. People should just be happy to unload an unwanted timeshare without risking an IRS audit and their financial future.

virginiab134 wrote:

This link you have provided appears to be affiliated with a timeshare rescue company. Are you affiliated with this company?

I am not affiliated with the company that I suggested you read their website .... I was going by the IRS charity donation rules at that website.

I am not affiliated with ANY timeshare company .... I am merely a previous timeshare owner that posts on Redweek's forums (I'm not even affiliated with Redweek except as a poster in their forums). I mainly post here to warn readers of all the scams relating to the timeshare market .... hundreds of new ones pop up everyday.

I am confused. Did the OP have a contract with DFAC that stated that x fees were due at closing or y fees would be due if the OP decided not to proceed with the donation after the TS failed to sell on the open market?

Yes. It was explained to him at the beginning of the process that there was no guarantee we could sell his timeshare collecting closing fees from the buyer. Once the broker informed us there was no interest, a specialist from our office contacted him and explained to him his options. At that point he signed a binding contract with us stating he would pay all fees involved with completing the donation. This contract was signed in November.

Yes but the OP wasn't "completing the donation." So did it state that the fees would be required even if the potential donor choose to initially list but not complete the donation? Since you didn't close a timeshare you really can't charge closing fees.

I guess if the OP signed a contract stating that he/she would pay the fees whether the TS was donated or not if he/she later chose to not go through with it than he owes the fees and still has a TS to deal with.

My suggestion is be very careful when signing an agreement and make sure you know what you are agreeing to.