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Re: Getting rid of your timeshare (by Dr. K.):

Let's look at what the IRS says:

(The following verbiage has been taken almost exclusively directly from IRS documents) Internal Revenue Service Review of Appraisals Real Estate

(Everything down to the Summary is directly quoted from IRS publications)

In general, there are three main approaches to the valuation of real estate. An appraisal may require the combined use of two or three methods rather than one method only.

Cost or Selling Price of the Donated Property The cost of the property to you or the actual selling price received by the qualified organization may be the best indication of its FMV. . .

1. Comparable Sales “Selection of Comparable Sales. . . the amount of weight given to a sale depends on the degree of similarity between the comparable and the donated properties. The degree of similarity must be close enough so that this selling price would have been given consideration by reasonably well-informed buyers or sellers of the property.” (Publication 561 -Determining the Value of Donated Property)

Unusual Market Conditions or example, liquidation sale prices usually do not indicate the FMV. Also, sales of stock under unusual circumstances, such as sales of small lots, forced sales, and sales in a restricted market, may not represent the FMV. (Publication 561 - Determining the Value of Donated Property)

2. Capitalization of Income (Doesn’t apply)

3. Replacement Cost New or Reproduction Cost Minus Observed Depreciation This method, used alone, usually does not result in a determination of FMV. When the replacement cost method is applied to improved realty, the land and improvements are valued separately.

Qualified Appraisal Generally, if the claimed deduction for an item or group of similar items of donated property is more than $5,000, you must get a qualified appraisal made by a qualified appraiser. You must also complete Form 8283, Section B, and attach it to your tax return. See Deductions of More Than $5,000, earlier.

A qualified appraisal is an appraisal document that: * Is made, signed, and dated by a qualified appraiser (defined later) in accordance with generally accepted appraisal standards, * Meets the relevant requirements of Regulations section 1.170A-13(c)(3) and Notice 2006-96, 2006-46 I.R.B. 902 (available at http://www.irs.gov/irb/2006-46_IRB/ar13.html), * Relates to an appraisal made not earlier than 60 days before the date of contribution of the appraised property, * Does not involve a prohibited appraisal fee, and * Includes certain information (covered later).

Form 8283 Generally, if the claimed deduction for an item of donated property is more than $5,000, you must attach Form 8283 to your tax return and complete Section B.

Purpose of Form Donee organizations use Form 8282 to report information to the IRS and donors about dispositions of certain charitable deduction property made within 3 years after the donor contributed the property. (Form 8282 - Donee Information Return (Sale, Exchange, or Other Disposition of Donated Property)

Appraisals Appraisals are not necessary for items of property for which you claim a deduction of $5,000 or less. (Publication 561 - Determining the Value of Donated Property)

For each comparable sale, the appraisal must include the names of the buyer and seller, the deed book and page number, the date of sale and selling price, a property description, the amount and terms of mortgages, property surveys, the assessed value, the tax rate, and the assessor’s appraised FMV. . . . Only comparable sales having the least adjustments in terms of items and/or total dollar adjustments should be considered as comparable to the donated property.” (Publication 561 - Determining the Value of Donated Property)

Summary: 1. Fair Market Value (FMV) has very specific and legal meaning in the IRS. 2. If the property is sold for cash, the sale price must determine the FMV. 3. Based on Form 8282, the time limit for this sale extends to 36 months from the date of donation. Thereafter, it doesn’t apply to valuation. 4. Only a licensed and qualified appraiser can give you a FMV. What you feel it’s worth based on your depressed sale circumstances has no bearing on the deduction you can claim. 5. That qualified appraisal must be based on comparable sales (items and conditions, not circumstances) with very specific quoted details of information generally only available at court recorder’s offices. 6. A donation value from $500 to $5,000 can be granted if there is no specific sale price for the donated item. 7. If the title is held for more than 36 months, the $5,000 non-appraisal donation credit can be taken with little risk of audit. The deduction is granted immediately and only subject to change if it is later sold for cash within 36 months of the donation date.

Finally, What if you do face an audit? Here are the criteria required to pay a penalty.

Penalty 20% penalty. The penalty is 20% of the underpayment of tax related to the overstatement if: • The value or adjusted basis claimed on the return is 200% (150% for returns filed after August 17, 2006) or more of the correct amount, AND (emphasis added) • You underpaid your tax by more than $5,000 because of the overstatement. 40% penalty. The penalty is 40%, rather than 20%, if: • The value or adjusted basis claimed on the return is 400% (200% for returns filed after August 17, 2006) or more of the correct amount, AND (emphasis added) • You underpaid your tax by more than $5,000 because of the overstatement.”

In other words, unless the error caused you to write off such a large amount that you actually underpaid your taxes by $5,000 based on the overstatement of value alone, you are no subject to a penalty.

Opinions may be interesting but they aren't informative or accurate unless backed up with specific references others can trace. Let's see your references.

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Timeshare Relief and many other affiliates charge $4,000 or more to take your timeshare from you. They are not granted the right to charitable donation credit. Don't believe you can write it off as a bad investment. The IRS will nail you on that. The key is to make sure you continue to control and keep your money if you don't get free from your timeshare. Any real estate closing company will hold your funds in an escrow account for return to you if the deed doesn't go through. Make sure you work with a licensed title closing company.

If you have specific question on the process I'd be happy to have you contact me directly.