A timeshare is an investment in real estate that an individual makes but shares the property will other investors. ‘Are timeshare maintenance fees tax deductible?’ When you have a timeshare you will be required to pay maintenance fees on the property. You will not be able to claim a tax deduction on any of the expenses associated with maintenance fees on the property, as stated by CPA David H. McClintock of Timesharing Today. The Internal Revenue Service (IRS) considers these fees as home improvements and do not allow a deduction.
If you purchased a timeshare because you wanted the rental income, you can deduct the fees if you have proof that the property is truly a rental. If the fees are for painting and cleaning you can deduct them as an expense of doing the rental business. You will be limited to a 14 day rental period if you do not plan on paying taxes on the property. If you do claim the property as a rental you must stay in the property for a minimum of 14 days each tax year and you must divide the expenses between personal and business use.
The IRS looks at the timeshare similar to homeownership. Most of the costs of the timeshare are because of maintenance of the property. The IRS considers this a not a qualifying deduction. Even if some of the fees are for a one-time project that builds a new sewer system, you cannot count them as a write off on your personal income tax return. If you took out a mortgage on the timeshare and you are paying interest and taxes you will be able to claim them on your taxes. When you try to determine ‘Are timeshare maintenance fees tax deductible?’ you should talk to a tax preparer who is familiar with the IRS guidelines.
The association must list the fees and explain specifically which fees paid which expense. If the fees paid taxes, then the association must identify them as such. If you want to take the interest and tax deduction on the timeshare you should have the paperwork that identifies these amounts. One of the best ways to get a tax benefit of timeshare ownership is by donating the property to a charity. The charity will tell you the amount the property sold for and you can deduct the fair market value of the donation. If the property had not sold by the time your income tax return was due, you will have to estimate the value.
In order to claim any deductions on your personal income tax return you will have to be able to file IRS 1040, Schedule A, Itemized Deductions. As long as your total deductions exceed the standard deduction allowed by the IRS code, you will qualify to itemize deductions. When you meet the IRS qualifications for deductions you can include your timeshare expenses that are allowable. ‘Are timeshare maintenance fees tax deductible?’ yes, only if they meet the IRS code requirements.