Can I Deduct Expenses for a Timeshare?

Business or Personal Use

A business owner can take a lot more deductions than a home owner or someone who uses a property as a vacation home or for other personal uses. However, for your timeshare unit to qualify as a rental business, you have to meet IRS rules. You must use your timeshare for no more than 14 days a year or 10 percent of the days it is rented, whichever is more, and rent the property for the rest of the time you own it. If you meet this requirement, you can deduct business expenses such as maintenance, advertising and other expenses.

While the business ownership expenses are more than the individual deductions for a timeshare, they don't typically apply. The IRS requires that the 14 day or 10 percent rule applies to the property itself, including all the owners of the time share. This means, for example, that if the timeshare is used for 200 days of the year, the total amount all the owners can use the property for personal use is 20 days. Because of this, it's unlikely that you'll be able to deduct rental expenses for a timeshare.

When you finance a timeshare, you might be able to deduct the interest you pay on the loan if the loan is structured as a mortgage. If you obtain the loan as a commercial loan, you cannot deduct the interest. You can deduct interest payments you make on a mortgage on either a first or second home. However, you must use a secured loan to purchase the time share agreement. A secured loan, such as a mortgage, requires you to provide collateral. If, for example, you use a credit card to finance the purchase, you cannot deduct the interest payments.

Another possible deduction you can make as a timeshare owner comes when you have to pay property taxes. Some states bill time share owners directly for their share of the property taxes. If this is the case, you can deduct the property tax as it is assessed directly against your ownership interest. If the taxes aren't billed directly to you or separated as part of your maintenance fee bill, you cannot generally deduct these payments.