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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.