Tax help please - regarding timeshare rentals

EAM · Apr 10, 2009

We own at more than one Wyndham resort, all are in points.
Last year we rented them for the first time. We reserved one unit and rented it, and we also rented out points (while we could still transfer them).

Do we need to enter all the Wyndham resorts we own and apportion the rentals among them? If so, how do we apportion them?

Since the fair market value has gone down since we purchased, I know that we need to depreciate based on fair market value when we first rented out the points. I have not found a place in Turbo tax to enter the current fair market value, only the purchase price. I can use the IRS forms, but I am not sure what to enter in which form. What would you consider a current fair market value for FSP points 1.5 cents per point perhaps?

Advice, please?

brother coony · Apr 10, 2009

On Sch.E put the amount you received for the rental. and minus the MFees for just the unit and points you rented. timeshare is not bussines property, so no depreciation. the fair market value is what you rent it for

csudell · Apr 10, 2009

http://www.tug2.net/advice/TUG_Taxes_and_Timeshares.htm

EAM · Apr 10, 2009

I have read the TUG advice article. According to that article, one can depreciate a timeshare, but the basis must be the lesser of the purchase price or the current fair market value. My question regards

1. Where does one enter that basis? On what form? Turbo Tax seems to presume that the basis will be the purchase price.
2. The resorts are in different location. Do I have to enter them as separate locations or can I lump them into one (I would prefer to do the latter).
3. I did not rent everything I own. I know that I can take depreciation only on the portion that I rented. However, of what I rented, part came from one resort, part from another since they are all in points.

It would be easiest if I just depreciated the points that I actually rented, but they came from resorts different addresses. Is that OK? If so, what do I enter for an address?

Jya-Ning · Apr 14, 2009

Not a Tax expert. JMHO. You are not doing it as business. I will guess the best you can do is treat it as hobby. In that case, I am not sure if depreciation apply. And I don't know if you want use schedule E. Also, the best you can do in this case is to balance out your rental income from that part.

In case you till want to do taht way, I believe you can ask tax expert and it probably be similar to rent out your own home, you can only depreciate the building, not the land, so you need to figure all that part out.

I don't believe TurboTax care how you get the number. You will be the only one need to care, since once you decide, it will be the same every year you file the tax. And it need to be able to survive common sense at court in case IRS try to talk to you about the reason.

I will use the rented unit as address, and avg all my point MF, than times the point I used for that reservation and all the cost. I don't think I can figure out the depreciation part, since it is no more than 1 week worth, and does not justify at all.

Don't forget the local government will want the sale tax also.

Jya-Ning

ps, this is from IRS

http://www.irs.gov/newsroom/article/0,,id=172833,00.html

What is a hobby? Hobbies, also called not-for-profit activities, are those activities that are not pursued for profit. What is a business? Generally, your activity is considered a business if it is carried on with the reasonable expectation of earning a profit.

If you are not sure whether you are running a business or simply enjoying a hobby, here are some of the factors you should consider:

*
Does the time and effort put into the activity indicate an intention to make a profit?
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Do you depend on income from the activity?
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If there are losses, are they due to circumstances beyond your control or did they occur in he start-up phase of the business?
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Have you changed methods of operation to improve profitability.
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Do you have the knowledge needed to carry on the activity as a successful business?
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Have you made a profit in similar activities in the past?
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Does the activity make a profit in some years?
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Do you expect to make a profit in the future from the appreciation of assets used in the activity?

An activity is presumed carried on for profit if it makes a profit in at least three of the last five tax years, including the current year (or at least two of the last seven years for activities that consist primarily of breeding, showing, training or racing horses).

If your activity is not carried on for profit, allowable deductions cannot exceed the gross receipts for the activity.

Deductions for hobby activities are claimed as itemized deductions on Schedule A, Form 1040. These deductions must be taken in the following order and only to the extent stated in each of three categories:

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Deductions that a taxpayer may claim for certain personal expenses, such as home mortgage interest and taxes, may be taken in full.
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Deductions that don’t result in an adjustment to the basis of property, such as advertising, insurance premiums and wages, may be taken next, to the extent gross income for the activity is more than the deductions from the first category.
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Deductions that reduce the basis of property, such as depreciation and amortization, are taken last, but only to the extent gross income for the activity is more than the deductions taken in the first two categories.

If you are conducting a trade or business you may deduct your ordinary and necessary expenses. An ordinary expense is an expense that is common and accepted in your trade or business. A necessary expense is one that is appropriate for your business.

Tax help please - regarding timeshare rentals

EAM

brother coony

csudell

EAM

Jya-Ning