There has been significant critical discussion about the process of Donating a Timeshare. Consumers who are left with lots of misconceptions… may have been deceived into paying HUGE UPFRONT FEES to make a Donation??
Consumer Red Flag
How can consumers first be promised thousands of dollars for their timeshare, and later told it’s worthless (like that was a surprise), only to be pressured to still “donate” their timeshare by paying thousands of dollars to do so? This question isn’t meant to vex great thinkers, because the answer is plain & simple: you may not want to be tricked by any means into paying thousands of dollars in UPFRONT FEES for a Donation Scheme. Perhaps it’s time to get some of the real facts from trusted experts.
In a recent Exposé by AARP, The Hidden Costs of Donating a Time-Share, AARP’s reporter Charles Humphries said, if philanthropy is your priority, give directly to a charity of your choice for meaningful impact. Essentially, consumers can’t fall for charitable subterfuge masking Upfront Fees.
AARP also noted that: Getting out from under a vacation property often means a “passel of hassles.” As Consumer Protection Attorneys we understand and agree, and offer comprehensive solutions for divesting a timeshare interest that do not involve any magic tricks. This usually just means a fairly boring [yet legally comprehensive & compliant] Deed and/or Negotiated Settlement Agreement that ensures all ownership, title, and interest is wholly divested, along with all associated fees and debts.
AARP also cited the fact that timeshare owners frequently discover that the resale value of their piece of paradise is only a fraction of what they paid. Another reality is the thousands that have not sold for $1 on eBay. But there may be some for some hope as recently reported by Clark Howard regarding Vacatia.com where I reply Blogged to Howard’s Consumer Advisory piece. Although not a perfect solution for everybody, this and other sound avenues to achieve a timeshare sale (assuming some marketable value does exist), should be explored with knowledgeable experts, and for that we are in total agreement. AARP provided more spot-on analysis of exactly what consumers face and what happens to them as a result:
Many are reduced to listing time-shares on Craigslist or eBay for pennies on the dollar, or paying shady resellers hundreds or even thousands of dollars to take the properties off their hands.
Meanwhile, those annual maintenance fees keep rising. That’s why AARP member Linda Milgate, 61, of Santa Cruz, Calif., asked On Your Side about donating a time-share to charity via an organization called Donate for a Cause.
The timeshare owner’s perspective is being bombarded with predatory claims to divest their timeshare by a selling a timeshare, or inventive ones on how to transfer a timeshare (some can’t even do that: total con-artists just collecting money). The AARP Exposé was in tune with this unfortunate perspective timeshare owners face:
BEWARE, THE FOLLOWING CLAIMS MADE, AND ARE LATER DEBUNKED BY AARP (EMPHASIS ADDED)
…to avoid myriad resale scams, Donate for a Cause looks promising. It offers to help transfer title, sell the property and donate a portion of the proceeds to charities like the American Cancer Society. The owner can write off the fair market value of the time-share on his or her federal income tax return. In theory, everyone wins.
To donate a time-share, you first transfer title to… Donate for a Cause… [the same owner] also owns Resort Closings. Donate for a Cause funnels prospective donors to Resort Closings.
Donors are told they can recoup several times that amount ($6,000, according to the website) by claiming the time-share’s market value as a charitable donation on their income tax returns.
Not so fast, warns the IRS
While time-share owners may be tempted to claim a five-figure value based on their original purchase price or what the resort is asking for similar units, the amount you can legally deduct depends on the “fair market value” — what a “knowledgeable buyer” would pay, not what a friendly appraiser says it might be worth. Time-shares donated to Donate for a Cause sometimes sell for as little as $50… a figure Donate for a Cause reports to the IRS.
At a cost of a few thousand dollars… don’t count on safely claiming a big tax write-off.
So from the information (above) from AARP it appears warranted to have critical discussion about the sub-elements of the process to closely examine Donating a Timeshare. For this sort of analysis, we found a multiplicity of online consumer concerns, which if necessary we can always link to in the future, but for now it shall suffice to say that there is a lot of consumer concern with this donation process, not the least of which is the IRS tax implications. No matter the source, or the method, no consumer wants to be a party to transfer fraud perpetrated against multimillion and billion-dollar resorts that may just fight back. And it appears that the American Resort Developers Association, ARDA, has their concerns with transfer companies negatively impacting their owners and provides information on their owners’ consumer site ARDAroc.org (please note this is the Resort’s major organization, but that also means they are well positioned to explore concerns with this entire outdated mode of timeshare divestment) [i.e. “Timeshare Transfers” et. al under various other names cited by ARDA]. The Transfer Model ceased to be a cooperative model for some major resort, certainly as early as 2009, and has only been weakened in the interim years.
*Detailed in our next Blog! (preview below)
Furthermore, no consumer wants to follow defective tax advice or be a part of any deceptions. So, an insightful breakdown of the elements involved in the donation process is helpful. There is some help and clarity from Consumer Advocate, Clark Howard. These models are difficult to assess, and only could be exposed with sophisticated knowledge of the truth of the maters asserted. It is difficult to understand and make this all less complicated for consumers to digest, so Clark Howard and others try to get clear information out protect consumers who could otherwise potentially be deceived into losing thousands of dollars on false pretenses. The conclusion of Clark Howard was:
Clark Howard is no longer recommending DonateforaCause.org as a legitimate way to get rid of a timeshare. clarkhoward.com/news/clark-howard/scams-rip-offs/getting-rid-of-a-timeshare-may-cost-you-2000/nFRs/
Here are the basic elements:
(1) the “donation” costs thousands of dollars [$3500…]
(2) inducement: thousands of dollars will be saved in a future tax deduction [$6000..]
(3) the timeshare value is is properly calculated as negative:
(a) “donative value” appears to be a negative for thousands of dollars “paid” to “donate” <$3500…>
(b) “market value” appears to be zero (or $50) at best, and perhaps thousands negative <$3500…>
This matter would only be appropriate for Tax Lawyers who are permitted to interpret IRS code and advise on implications to fully explore. We can say that given elements 3(a) and 3(b) above, it is certain that no substantial value exists, and that would appear necessary to support a tax benefit.
The elements at their basic core meaning, reveal tax code interpretation issues, so it is highly recommended that anyone who would entertain this course, would first check with a licensed Tax Attorney. Have the Tax Attorney cite any relevant code, the known limitations and perhaps have your Attorney directly investigate this activity with IRS officials. It may well be determined that this is not a qualified tax deduction, and if that is your advisement by such Lawyers and IRS Officials, then you will have your answer… the safe, accurate and unbiased way.
In the opinion of our Consumer Protection Attorneys (I believe 4 of the firm’s Attorneys weighed in on this): the surefire way to achieve a timeshare divestment, is through direct resort cooperation through a negotiated resolution to secure a resort signature and cancellation of the timeshare interest.
If this is sort of procedure you want to safely & legally divest from a timeshare, and you desire less trickery or any irresponsible claims involving IRS tax savings, then you are a wise consumer. The secure decision would appear to be gravitate towards the safety & transparency of Consumer Protection Attorneys skilled in legal procedures to secure a Timeshare Divestment. As a consumer, you can relax and enjoy NO Upfront Fees!
The Timeshare Transfer Industry… A Broken Model? Now Outlaws?
A New Sherriff in Town says “no” to transfers… See it our next Blog!
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