How do I ditch a timeshare?March 20, 2012: 6:00 AM ET
I'm an owner of a timeshare unit at a 5-star resort in Hawaii. I'm paying a high maintenance fee, but not using it every year. I try to rent it, but it doesn't always work. Is there a better option of getting rid of it other than donating it to charity, or selling it at a deep discount (meaning selling it for $5,000 with a purchase price of $50,000)? — C.K., Edmonds, Wash.
Not only is there not a better option out there, but the two options you listed aren't really viable options to begin with. "You can't donate a timeshare to charity," says Ric Edelman, a financial adviser and author of Rescue Your Money. "They're worthless, and charities don't want them any more than you do." The problem is that you're trying to donate something with an annual cost—the hefty maintenance fee—and charities don't want to be stuck with the yearly expense. Plus, even if you do find a charity willing to take it, it's not going to do a thing for you come tax time. "You're not entitled to a tax deduction because the IRS is holding that these things have no value worthy of donation," Edelman says.
That leaves you with the only other option, which is to get rid of it for whatever price you can, and frankly, if you can get $5,000 for yours, you should really consider it. In fact, if you can get someone to take it for free, you should consider that as well. "The person willing to take it from you for nothing understands that they're going to have to make the maintenance payments on an annual basis," Edelman says. "That's their expense."
There are a variety of websites that try to put timeshare buyers and sellers together, but you have to watch out for scams—never pay anything up front. You might also consider swapping the week for a week someplace else—there are a number of websites that will help you do that, also. "At least you can preserve the vacation element of the product, since you can't unload it," Edelman says.
And just so you know, if you sell it at a loss, you're not entitled to any kind of capital loss deduction, since the IRS values your timeshare at $0.
-- Kate Ashford
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