Can I File My Time-Share Property on My Taxes?
- If you own and use a time-share unit as a vacation home, you're entitled to the same deductions as you could claim on a second home. If you pay part of the property tax on the unit, you can write that off on your income taxes. Any mortgage interest you pay is likewise deductible. Other expenses, such as your share of maintenance and repairs, are usually nondeductible. You can't deduct improvements to the property, such as a new roof, though they will lower your capital gains if you and your co-owners sell.
- If you and your co-owners rent out the time share for a total of 14 days or less during the year, you may not have to report any rental income. If it's more than that, compare the percentage of the total rental time to the owners' total personal-use time. As a rule of thumb, if the total personal use is 10 percent of the rental time or less, you can deduct rental expenses and claim them against nonrental income. If the personal use is a higher percentage, you can only deduct expenses from your rental income.
- The IRS provides guidelines for separating rental time from personal use. If one of your co-owners uses your time allotment, it counts as personal use, even if they pay you for it. The same is true if one of your relatives rents it from you for a week: it's still a week of personal use. If you let anyone rent for below market value or you trade weeks -- you swap your week in Maui this year for a week in a time share in the Rockies, for instance -- that's also personal use.
- When figuring rental expenses, you must apportion the costs of the property between personal and rental use. If the property rents out for 25 percent of the year, each owner can claim 25 percent of rental expenses as a deduction. Real estate attorney Andy Sirkin states online that if this approach is too complicated, the IRS may allow you to allot expenses based on your own use: if you own two weeks and rent for one, you could deduct 50 percent of expenses.