Risk vs Reward in Timeshare Ownership

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If you’re thinking of purchasing a timeshare, there are a number of items to consider before committing yourself to a contract. If you already own a timeshare and are thinking of getting another, you may find it useful to review what you have to gain – or potentially lose. While there are certain advantages to spending your money on a resort interval, you may ultimately decide that these are far outweighed by the cost.

Knowing where you’re going to vacation each year can be its own peace of mind, but these days there are plenty of short term options that may better suit your finances. And when it comes to a timeshare, you have to think in the long term. As you probably know, your contract is designed to keep you in your property for decades. Before you decide to avoid, retain or double-down on a timeshare, think about the risk vs. reward and how much you can afford to lose.

Drawbacks for New Owners

For anyone considering a timeshare for the first time, the initial risk comes down to who’s selling the property. Although you’ll find a number of legitimate vacation resort purveyors, there are some individuals (and companies) that are merely peddling scams. Pitching you during expensive dinners or in high-profile locations may merely be a cover for a group offering little more than fraud. Make sure to do your research before providing any type of payment information or signing any agreements.

Once you know that the business you’re dealing with can be trusted, you must next consider the money you’ll spend for the timeshare. The attraction to a resort interval may be owning a property you couldn’t otherwise afford. And while a timeshare doesn’t come with a mortgage, the purchase price typically leaves you dealing directly with the company setting the cost. Loans for a timeshare will likely come with a staggering interest rate, which will only be compounded by the yearly fees (and taxes) you’ll be paying.

Finally, you can’t afford to look at a timeshare as an investment. The fact is that resort properties not only drop in value, they can be difficult to sell. You may end up paying to get out of the timeshare in the end, long after you’ve dumped thousands of dollars into the property.

The Trap of Ownership

Whether you’re a first time buyer or a seasoned timeshare owner, it’s easy to come to view your resort property as a trap. This is particularly true if you are in a fixed contract, locking out any time period other than the same fixed week each year. You may also not enjoy the option of switching over to alternate properties under your agreement, which only further aggravates your situation.
And then you have the fees. The fine print in your contract contains some of the most disturbing information regarding the true cost of your timeshare. It’s not uncommon for interval owners to pay over $600 per year just in maintenance costs. When it comes to how your taxes are affected, the picture only gets worse. The IRS will not permit you to write off a capital loss if and when you decide to sell your timeshare.

The Upside

If you can overlook all of the disadvantages to owning a timeshare, there are some perks. Rather than buying a house or a condo outright in a vacation town, you’re really only owning a week at your property each year. This can be an ideal situation if you don’t want the burden of having an expensive second house payment.

Your schedule may also be another item in the plus column, if your timeshare coincides with your work calendar each year. You may even find that your contract enables you to try out new properties by trading with other owners, as many agreements will allow for this. And while you won’t see a tax advantage if you try to sell your timeshare, you may be able to donate a week to charity.

Buying or Selling?

You may decide that buying a new (or another) timeshare is the right move. Alternatively, you may conclude that selling your interval is in your best interest. Although putting your property on the secondary market can be a lengthy and stressful experience, you have options to make the process a little easier. Celebration Resort Relief is available to explain what you can do if you’re ready for a timeshare release.

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