Friday, March 27, 2015

Don't Get Taken In A Timeshare Tax-Deduction Scam

The timeshare related fraudsters hell bent on separating you from your hard earned money do not take a break and seem to come up with ever more clever ways of taking advantage of you.

With tax season here, I've heard from an increasing number of consumers who have been promised a tax deduction of upwards of $25,000 if they “donate” their unwanted timeshare…for a hefty fee of up to $5,000 of course.
Legitimately donating a timeshare is almost impossible and trying it usually results in an IRS audit and fines.

Here are some tips and things to remember before doing business with anyone claiming to “help” you donate your timeshare:

If you donate anything else such as a car, clothing or money, there is no “fee” to do so.  Why then, would there be a fee to donate your timeshare?

The timeshare owners I've heard from were contacted by a third party, NOT the purported charity. The Red Cross, Disabled Veterans of America, Goodwill, the United way, etc. do not work with third parties.

All of the companies initiated contact.  No legitimate company will ever initiate contact.  This goes for resale, rental, listing, transferring, "getting out of" and donations.

A charity cannot accept a donation if it comes with an ongoing liability and annual maintenance fees are an ongoing liability

Your timeshare does NOT have a $25,000 value, or a $15,000 value, or in most cases, even a $7,000 value.  Timeshare is not an investment and the value of it does not increase over the years.  Here is a definition of Fair Market Value that should clear things up: Fair market value is the price at which property would change hands between a willing buyer and a willing seller, neither having to buy or sell, and both having reasonable knowledge of all the relevant facts.

If the legitimate charity receives anything (doubtful in most cases), it will be a nominal amount of no more than a few hundred dollars which comes directly from the fee the company is charging you, NOT from the value of your timeshare, which as stated above, the charity does not want and cannot take

If you own a timeshare that you no longer need or want, here are some tips:

Seek out unbiased information on how to use it better, including alternate exchange companies or renting it.

Call the resort and inquire if they will buy it back from you.

If you decide to sell it, only work with those organizations that you contact first and that do not require an upfront fee or give you any promises about selling
Bottom line is don't do anything before checking with an unbiased source of information.   That source of information is NOT the one trying to convince you of anything.

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