Original Message:
Re: Has anyone ever donated a timeshare for a tax write-off? (by KC):
jayjay wrote:======================================From CPA DaveM:There are a few errors and an omission in your post.
First, sales by the developer don't enter into determining the value that an owner should claim when determining how much to deduct for donating a timeshare. That's because the donor must value the donation based on what a willing buyer and seller would agree to as a price in the marketplace that the donor has access to - the resale market. There's an old IRS revenue ruling that makes that clear.
Second, you imply that the donor is bound - in determining value - by the ultimate sales price of the timeshare. Although that's the law when donating a car, that's simply not true for timeshares. That sales price is only one factor in determining value. As an example, many of the so-called "postcard companies" dump timeshares on ebay for practically nothing. Those same timeshares when sold properly will often fetch much more. Thus, the actual selling price (e.g., on ebay) is not determinative.
Finally, you are correct that there is no $5,000 (or any other) limit on how much one can deduct for donating a timeshare. No one has ever suggested here that there is such a limit. However, what you omitted is that if the claimed deduction exceeds $5,000, the donor must obtain an appraisal of the timeshare performed by a "qualified" appraiser in a manner that meets IRS standards. Otherwise, the donor is not entitled to any deduction.
Dave M is a VERY savvy guy and I'd certainly take his word as being the accurate gospel truth. He definitely knows whereof he speaks....
I too was once confused about the $5k figure, thinking (incorrectly, as it turned out) that the figure was a "limitation on deductible amount". I learned later that this figure is, instead, the threshold above which claimed value a formal appraisal must then be obtained. In my own mind, I guess I then still regarded the $5k as a sort of "practical" limitation anyhow, since I personally don't know of any professional entity which does "timeshare appraisals" --- whose word would be sufficiently acceptable to the IRS. That's not to say that such entities don't exist, just that I personally have no idea how/where to find them. Frankly, I wouldn't be much interested in paying them several hundred dollars anyhow, even if I DID find them. As it turned out, however, I couldn't even manage to get the donation accepted in the first place, despite it being debt free and with all fees current. I gave up and now just convert that "weak week" over to RCI "points for deposit" each year, then using those points for other purposes. My solution is NOT one which I would particularly recommend, unless you can buy into a RCI points resort for VERY low cost AND a low annual maintenance fee -- easier said than done in these days of increasingly escalating annual maintenance fees.