The American Resort Development Association (ARDA) is the timeshare industries trade association. ROC stands for Resort Owners Coalition.  ARDA is a major lobbying force that seeks to protect the timeshare industry from unnecessary laws, regulations, and taxes. The ARDA-ROC  was formed in 1989 to protect timeshare owners and timeshare owners have benefited from ARDA-ROC actions to limit timeshare owner taxes.

The coalition is funded by voluntary contributions. According to the ARDA-ROC website they have over 1 million members who contribute $3-$10 a year (over $3 million a year).  The FEC has recently questioned the disclosure and use of the fees collected by the ARDA-ROC. The FEC questioned contributions from the fees with regard to fees paid by corporations and/or private individuals who are not US citizens. In August 2010 the FEC fined the ARDA for a total of $900,000 (more information)

In response to the FEC’s audit, ARDA made the following, undated, post on itswebsite at http://arda.org:

There was recently some misleading information circulated about ARDA-ROC PAC, in reference to a random Federal Election Commission (FEC) Audit of 2003-2004 voluntary contributions. As a result of the audit, ARDA implemented the FEC’s request to put uniform language about PAC contributions on owner invoices or in an accompanying letter. The following is the uniform message approved by the FEC and communicated to the PAC contributing homeowners associations (HOAs):

“Individual contributions to Federal political action committees are strictly voluntary and not tax deductible for federal income tax purposes. Corporations may not contribute to Federal PACs. Only U.S. citizens and permanent green card holders are eligible to contribute. Contributions from Foreign Nationals are strictly prohibited.”

In addition to uniform standards, ARDA has also retained a prominent data company to further ensure that we are in compliance. This is particularly important, given the sheer volume of the $3.00 to $10.00 individual contributions received to support homeowner advocacy.

ARDA is proud of the grassroots participation by hundreds of thousands of timeshare owners and their HOAs that support ARDA-ROC PAC. It is through their efforts that we are able to continue to protect the integrity of their timeshare purchase. Through ARDA-ROC PAC, we will continue to monitor regulatory proposals and proactively respond, to ensure owners are not adversely affected by ill-advised efforts to assess owners for property taxes beyond fair market value of like-sized condominiums, as well as to fight transient occupancy taxes when localities try to misapply these hotel taxes to timeshare owners and exchangers. ARDA ROC and ARDA-ROC PAC are true timeshare advocates and rely on the voluntary pledges of nearly one million timeshare owners.

Maintenance
The cost of repairs and upkeep at the resort. Repair expenses are easy to understand, if something is broken it needs to be fixed. Upkeep, refurbishing, updating, or renovation usually represent similar costs.  Every resort needs to be continuously refurbished to keep it “up to date”.  Televisions are replaced with newer LCD models, beds are replaced, bathrooms are refinished, etc.  Most resorts will follow pre-defined upkeep intervals that are defined by the board.

Personnel
Salaries, wages, taxes, and insurance associated with staff. It is common for this to be the largest expense.

Taxes
Taxes can vary greatly depending on the location. At the very least a resort will need to pay property taxes. Maui assesses a special “timeshare resort” tax.

Insurance
Insurance is another item that can vary greatly. It may include hurricane, flooding, fire, liability, or other insurance.

Depreciation
An accounting expense, not a real expense, based on the assumption that real property will depreciate over time.

Bad Debts
Maintenance fees and/or taxes that owners failed to pay and the fees associated with attempting to collect the debt. Eventually the resort will repossess weeks from owners who failed to pay; Those weeks will be sold to new owners.

Deficits
A portion of this years budget may be used to pay off prior year deficits that the prior years budget failed to cover.

Supplies
Expenses commonly associated include cleaning supplies and office supplies.
This list of categories should not be considered comprehensive. Review your resorts budget to understand their operating expenses.

Have a specific charity that you would like to donate to? Most charities do not accept timeshares. Transferring ownership of a timeshare can be difficult for charities that infrequently receive timeshare donations, but don’t give up hope.  There are numerous companies that can handle the process of donating your timeshare.  We should also mention there are disreputable businesses who may also offer to assist with the donation process.  Always check the BBB before doing business with any timeshare company.

Timeshare donation companies operate on a fairly simple formula. The company donates the timeshare to a charity in the owners name, buys the timeshare back from the charity, and then sells the timeshare. The timeshare donation company is a for-profit company, but this is a win-win situation for all involved. The owner can walk away from their timeshare with a tax deduction, the charity receives a donation, and the timeshare donation company makes a profit (most of the time).

The only entity with anything to lose is the timeshare donation company, they are taking all of the risk. As with any successful company, the timeshare donation company needs to mitigate their risk.  Most timeshare donation companies mitigate their risk by only accepting deeded and right-to-use weeks with all fees paid up.  The companies can be picky about what they accept.

Consult your accountant to understand the details of the tax deduction for the donation. Typically the process is fairly simple if the fair market value of the donation is less than $5,000. Donations over $5,000 will typically require a certified appraisal.  Review the IRS website for more information on noncash contributions to charitable organizations. Keep in mind the charity will disclose the buyback price of the timeshare to the IRS and the buyback price will most likely determine the amount of the deduction.

Still have questions about donating your timeshare? Ask a question, no registration required and it takes less than a minute.

Interest paid on a mortgage loan to buy a timeshare  is often deductible. The tax law allows deductions for most interest expense that an individual pays on a primary home and one other home, such as a timeshare or other vacation home.

You can treat a home under a time sharing plan as a deductible interest qualified home; if it meets all IRS requirements. The interest is deductible only if the loan is secured by the timeshare as a mortgage and you deduct no other mortgage interest except on your primary home. Note that most timeshare loans do not qualify because they are written as consumer loans rather than as mortgages.

If you have loans on more than two eligible homes, you may choose which two homes (one of which must be your primary home) you will treat as qualifying for interest deduction purposes. You may change your choice of qualifying properties from year to year. Many people with multiple properties, choose the one they have paid the most interest on, resulting in a bigger deduction.

If you have a timeshare week on a long-term lease (a Right-to-Use or “RTU”timeshare), the interest on a loan secured by that week will normally not be deductible. To be entitled to a tax deduction for interest expense in connection with such a purchase, you should finance it with a mortgage or home equity loan on your primary home.

Normally, interest expense and/or property taxes will be the only deductible expenses in connection with your timeshare ownership. A loan must be carefully structured for you to be entitled to that interest deduction. Property taxes may be deductible for timeshares if the property tax is separately billed or separately shown on the maintenance fee billing. This would usually be the case if you receive a property tax bill from your county of residence.

It may be wise to consult a tax expert with all your available loan and tax bill receipts. They would be able to narrow down what if anything you are able to deduct.

Inheriting a timeshare may be beneficial for some families. In other cases it can be a burden. Some families cannot afford the annual maintenance fee ($815/year average) and possible unexpected special assessment fees. This situation can be a serious problem for some. Proper estate planning should take into account the needs and desires of the inheritors to protect their credit and avoid losing the timeshare completely. Consult with your spouse and/or children to determine if they would welcome the timeshare in their inheritance.

Some of you reading this article may be in a situation where a loved one has willed you a timeshare, but you do not want to accept it. A timeshare inheritance can be refused by filing a Disclaimer of Interest although it may not be possible to disclaim the timeshare without disclaiming the full inheritance. Refusal to accept the timeshare may result in the timeshare company filing a damage claim against the estate for future loss of revenue. If the timeshare is not willed it will become part of the probate estate and when the estate is closed the timeshare ownership may terminate. If you find yourself inheriting an unwanted timeshare, be sure to seek legal advice to avoid damaging your personal credit.

Do you have a timeshare question? Ask a question, no registration required and it takes less than a minute.

Never pay an upfront fee
There are many less-than-reputable individuals and companies who will contact you with guarantees of selling your timeshare for an upfront fee. Don’t do it. The “broker” has no motivation to sell your timeshare after they have collected the up-front fee, and you will probably never receive a return on the fee due to a lack of sale.   The only exception to this rule is paying a fee to list your timeshare with a reputable company like Ebay or Craigslist.

Most timeshares sell on the resale market for up to 50% of the initial price
Be prepared to take a loss when you sell your timeshare. Making money on the “investment” of a timeshare is the exception to the rule. The value in a timeshare is the vacation, not a monetary return. Research what other comparable weeks and locations are selling for to get a feel for the market. The price you ask may be higher than what is available on the market, or it may be lower if you are looking for a quick sale.

You will need to cover the difference
If you have a timeshare loan then you will need to be prepared to write a check for the difference of the sale price and what you owe.  Don’t have enough cash on hand to cover difference? Rent the timeshare until you have paid down the loan.

Caveat Venditor – Seller Beware
The timeshare resale market attracts scammers on a global level. Walk away if you sense a scam. Always give yourself 24 hours to think before exchanging any money or signing any contract.