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Clark Howard on Timeshares

Robert D

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I was listening to Clark Howard on the radio this evening and a guy called in about selling his TS, saying he'd been unable to sell and would give it away, and would even be willing to pay someone a reasonable amount to take it. He didn't mention the name of the TS. Clark told him there was no aftermarket for timeshares and it's impossible to sell a TS in this economy. He also said the only legitimate upfront fee company he knew of was Donate for a Cause.

I like Clark and think he generally gives good advice but although his statement is true for a lot (probably most) TS's, he's way offbase saying there's no aftermarket for TS's. Hundreds of TS's are sold on the aftermarket monthly and many TS's at quality resorts during peak periods still bring a fair amount of money on the aftermarket. I wish someone could convey this information to him.
 

TUGBrian

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Clark has been a long time supporter of TUG as well, he usually mentions us when anyone calls asking for help with their timeshare.
 

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He's pitching to the person that would rather pay 10-15 thousand in ongoing maintenance fees + inflation than take a 15,000 loss and admit he made a wrong purchase
 

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Clark has said one of the best ways to sell your TS is to ask the other people at that TS if they want another week when you are there on vacation.

When we told people around the pool that we bought our last week for $300 they were shocked and want to know how they could pick-up a buy like that.
 

Robert D

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Clark has been a long time supporter of TUG as well, he usually mentions us when anyone calls asking for help with their timeshare.

I've heard him mention TUG before but he didn't tell this guy about TUG last night for some reason. He only mentioned Donate for a Cause. Sellers would benefit a lot more from TUG than these guys, IMHO.
 

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Clark has said one of the best ways to sell your TS is to ask the other people at that TS if they want another week when you are there on vacation.

When we told people around the pool that we bought our last week for $300 they were shocked and want to know how they could pick-up a buy like that.

I agree with this. It's a shame some resorts charge a fee to "list" a timeshare for sale (internally with the resort I mean) because there are instances where people are on vacation and want an additional week, or they are there with family and the family members want a week. It's easier to just waltz into a sales office or talk to the front desk and find out about a week. Often these seem to sell for much higher than what they might sell for on ebay.
 

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Donate for a Cause

I've heard him mention TUG before but he didn't tell this guy about TUG last night for some reason. He only mentioned Donate for a Cause. Sellers would benefit a lot more from TUG than these guys, IMHO.

Robert,

Thank you for opening this discussion. While I do agree that TUG is a great resource of any and all involved in the timeshare world, I have to disagree with your statement. Donate for a Cause has assisted donors with their timeshare donations since August of 2004. Over the past 6 years, we have gained a wealth of knowledge regarding the donation process. We do urge our donors to due their due diligence with regards to researching their donation, and we refer many of them here. That being said, there are simply too many questions out there regarding timeshare donations, and there is too much mis-information out on the message boards to just let our donors loose. I hope you can understand my standing on this point, as I do agree with you that TUG is a great resource for the donors. I just disagree with your stance that we are not the best place for them to get information.


Sincerely,

Keith Hart
Donate for a Cause
 

Robert D

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Robert,

Thank you for opening this discussion. While I do agree that TUG is a great resource of any and all involved in the timeshare world, I have to disagree with your statement. Donate for a Cause has assisted donors with their timeshare donations since August of 2004. Over the past 6 years, we have gained a wealth of knowledge regarding the donation process. We do urge our donors to due their due diligence with regards to researching their donation, and we refer many of them here. That being said, there are simply too many questions out there regarding timeshare donations, and there is too much mis-information out on the message boards to just let our donors loose. I hope you can understand my standing on this point, as I do agree with you that TUG is a great resource for the donors. I just disagree with your stance that we are not the best place for them to get information.


Sincerely,

Keith Hart
Donate for a Cause

Keith, I hear what you're saying but doesn't your business now accept timeshares for an upfront fee where there are no non profits who will accept that particular timeshare? If so, how much do these upfront fees run? If there is no value to the timeshare, I don't see how the owner can get a tax deduction for donating it, but maybe I don't understand the nature of the transaction.

I still think that if I had a friend who had a problem timeshare on his hands, he would be better served on TUG (assuming he's willing to do some work investigating the various alternatives, one of which is DFAC) than being referred to your firm.
 

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Donate for a Cause

I have decided to pull this post for 2 reasons. Reason number one is that it caused to much confusion. Reason Number 2 is because the other posters have taken this post in a completely different direction, and we do not want to be associated with it any more.

Keith Hart
website deleted--advertising not permitted on this forum
 
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Robert,

To remedy this we are now asking the donors to pay for 2 closings. The first to the charity and the second to the prospective owner. This way we are able to sell the property for something.

Regardless of what the timeshare sells for, the donor gets a nice tax write off. With the $1895 fee they get a licensed appraisal to prove the fair market value of their donation. Those appraisals have historically come back at 80% of the original purchase price from the developer.


Your two statements contradict each other
 

weh8625

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Donation value

I think what he's saying is it's the same thing when I donate an old couch to the Salvation Army. I claim the value as $400 on my taxes, but they can only sell it for $50.

In this case the appraiser provides you with a good value for the tax write off of the donation, but it's far above the $1 that the unit sells for on Ebay.
 

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I think what he's saying is it's the same thing when I donate an old couch to the Salvation Army. I claim the value as $400 on my taxes, but they can only sell it for $50.

In this case the appraiser provides you with a good value for the tax write off of the donation, but it's far above the $1 that the unit sells for on Ebay.
And if you were ever audited the IRS would disallow that $400 deduction unless you could prove that you actually could have sold that sofa for $400.

Same thing with the claimed timeshare deduction. In fact, if the IRS suspected that the "licensed appraiser" was providing overinflated appraisals, use of that appraiser could increase the chances of being audited.
 

Karen G

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Regardless of what the timeshare sells for, the donor gets a nice tax write off. With the $1895 fee they get a licensed appraisal to prove the fair market value of their donation. Those appraisals have historically come back at 80% of the original purchase price from the developer. Our average donor saves about $6,000 on their taxes as a result their donation. The charities win and the donor wins.

Sincerely,
James P. Tarpey, Esq.
I think Mr. Tarpey needs to rework the above paragraph because the definition of fair market value is this: Fair market value (FMV) is an estimate of the market value of a property, based on what a knowledgeable, willing, and unpressured buyer would probably pay to a knowledgeable, willing, and unpressured seller in the real estate market. ...

No knowledgeable buyer would pay 80% of the original price of a timeshare in today's market. Plus, anyone who claimed a $6000 deduction for the donation of a timeshare would have to prove that value if he audited by the IRS. Further, I seriously doubt that a knowledgeable timeshare seller would pay $1895 for such an appraisal. Hopefully, those who read TUG are more knowledgeable than that.
 

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Maybe I'm just not seeing it but, if they are making owners pay 2 closings, where are they selling these timeshares? A buck on ebay? I didn't see any place on their site to actually sell them. How are they creating revenue from the sales (aside from charging the upfront fee)?
 
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Maybe I'm just not seeing it but, if they are making owners pay 2 closings, where are they selling these timeshares? A buck on ebay? I didn't see any place on their site to actually sell them. How are they creating revenue from the sales (aside from charging the upfront fee)?

Many organizations work with large resellers to offload inventory vs just selling it themselves.
 

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I have decided to pull this post for 2 reasons. Reason number one is that it caused to much confusion. Reason Number 2 is because the other posters have taken this post in a completely different direction, and we do not want to be associated with it any more.

Keith Hart
Donate for a Cause
 
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Karen,

The developers are still selling these properties at the full retail price, so there are still buyers out there for this particular price point. Also, the $1,895 is not for just the appraisal, it is for the entire process. The appraisal fee is wrapped into the $1,895, which is the cost that Donate for a Cause incurs while transferring the property.

Keith Hart
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I think you are shading the definition here in a way that could get someone in trouble..

Fair Market Value is what you could sell the unit for in an arms length transaction. Effectively it is the price that an owner could expect to receive if the owner resold the property. The fact that the developer is selling it for more money is relevant only the extent that changes the price at which the owner could resell it.'

This is common situation involving items that have significant depreciation out the door. Fair Market Value for donation purposes is the depreciated value.

For example, if I buy a car from a car dealer and immediately donate that car in a charity auction, the deduction is the depreciated blue book value, not the prices charged in the showroom. The fact that the dealer is selling that exact same car for 20% more than blue book for the identical is irrelevant, because blue book is what the owner could expect to receive.
 
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Karen G

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Karen,

The developers are still selling these properties at the full retail price, so there are still buyers out there for this particular price point.
Well, I suppose that is a valid point if you are talking about someone who just bought a timeshare today for $30,000 in a brand new resort, for example, and then tomorrow decided they didn't want it and would donate it to your organization. A case could made that $30,000 was a fair market value. But what about someone who bought a timeshare for $25,000 ten years ago in a resort that is now ten years old. What would your appraiser give as a fair market value for that one?
 

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Donate for a Cause

I have decided to pull this post for 2 reasons. Reason number one is that it caused to much confusion. Reason Number 2 is because the other posters have taken this post in a completely different direction, and we do not want to be associated with it any more.

Keith Hart
Donate for a Cause
 
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Rent_Share

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The only thing I can say is prepaying for two closings and an an appriasal fee at $1,800 is better than paying $3,500 for a POA and the hope of a recording into somebody elses name if they are willing to assume the maintencnace fees


As to stating that one can take an 80 % of purchase price as a tax loss is irresposible in 2004 the IRS limited these types of losses on cars to the Gross Sales Proceeds after the donated propeorty weas sold

http://www.irs.gov/newsroom/article/0,,id=131660,00.html

Since tineshares depreciate faster than vehicles, I do not believe the appraisal would stand in an audit
 

DFC Answers

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Donate for a Cause

I have decided to pull this post for 2 reasons. Reason number one is that it caused to much confusion. Reason Number 2 is because the other posters have taken this post in a completely different direction, and we do not want to be associated with it any more.

Keith Hart
Donate for a Cause
 
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TUGBrian

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You can deduct up to $5,000 on any donated real property, i.e. a timeshare, with no proof of the value.


until you get audited...

Knowing your timeshare only sold on the resale market for a few hundre dollars, and claiming $5000 as a deduction on your taxes...is IMO...cheating on your taxes.
 
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Rent_Share

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Rent Share,

I am glad that you can see the benefit of our Guaranteed Donation Program. .

MY POINT WAS $2000 for a recorded deed out of your name was a better offer than paying 3500 for as POA that might not ever be recorded.

In no way am I saying that it is a good option just better than the trap so many fall into after being invited to a seminar

With regards to the amount of deductions on real property, here is the rule. You can deduct up to $5,000 on any donated real property, i.e. a timeshare, with no proof of the value. If you want to deduct even a penny more, you must have written proof of the timeshare from a licensed appraiser. The IRS publication 526 deals with this.

Need to review the actual wording of Pub 526 . . .

Knowing you had to pay $2,000 in costs to stop the bleeding on maintenance fees and then taking $5,000 or 80 % of the purchase price as FAIR MARKET VALUE is tax fraud.


Where did you get your training Westgate ?????
 

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I agree with Rent Share. If you have to pay someone $1,895 to get rid of your TS, how in the world can you justify a market value of $5,000 for a charitable donation of this TS. By definition it's worthless if you have to pay someone to get rid of it. Keith, if I were you, I'd ask Brian to purge this entire thread off of TUG because if the IRS gets wind of it they will likely be on your doorstep and charge your firm with proliferating a tax scam.

The other thing I wonder is why the owners wouldn't just put it on Ebay for $1 and pay all of the closing costs - you can get a full closing done for no more than $250 and a deed transfer done for a lot less than that. It sounds like what DFC is doing is similar to a post card company except that they don't charge as much as some of them and then get some of the owner's money back through a shaky (at best) tax deduction.

I know that a lot of TS owners don't know how to sell (i.e. give away) their TS on Ebay. This could be a legitimate business opportunity for a Tugger to offer a service to sell TS's on Ebay for a fee that would be the cost to list it upfront and a success fee of say $500 which would include the closing cost.
 

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Sellling a timeshare for someone is a lot more difficult than just listing it on ebay for $1. There would be a lot of rules and regulations. Even trying to get people willing to give it a try would be hard.

The succes rate would not be very high as well. Lots of timeshares do not sell on ebay for $1 with free closing.
 
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