What Are the Tax Advantages to Owning a Time Share?

A waterfront timeshare may provide many tax advantages.

A waterfront timeshare may provide many tax advantages.

Timeshare owners have an amazingly long list of tax advantages available to them. Depending on how much time you have for your timeshare, it may be considered a vacation home for which the IRS allows a number of deductions. Then, again, if it is used strictly for a rental, there are other tax advantages. Consult an accountant or tax attorney before buying a timeshare for tax advantages.

Vacation "Home"

If the timeshare is used for personal use more than 14 days or 10 percent of the time it is rented to others, whichever is greater, the IRS considers it a home. In this case, timeshare owners generally have the same tax advantages available to homeowners. On their tax returns, they may claim certain expenses incurred for owning and maintaining the property, such as the cost for homeowners insurance and upgrading to an energy-efficient HVAC system. If rented out for 14 days or fewer, timeshare owners do not have to report rental income, but they also cannot claim rental expenses.

Mortgage Interest and Insurance

Most tax deductions for timeshares are claimed on Schedule A and D of IRS Form 1040.

The IRS allows timeshare owners tax deductions for mortgage interest and qualified home mortgage insurance. If used strictly as a vacation home, timeshare owners may claim both as deductions on Schedule A, IRS Form 1040. If the timeshare is used for investment purposes only, then the only deduction allowed is the mortgage interest. Indicate the amount on Form 4952 and submit it when filing the current year’s income taxes.

Real Estate Tax

Paying real estate tax for a timeshare is a tax advantage. When owning a timeshare, you can claim the property tax on your tax return for the year in which the tax is paid. Keep a copy of the timeshare property tax receipt and claim the amount paid on Schedule A, IRS Form 1040.

Rental Only

Renting out a timeshare presents a number of tax advantages.

If the purpose of the timeshare is strictly as a rental and the owner does not use the timeshare for personal use, then several expenses may be claimed as tax deductions. Some include the cost to advertise the rental, commissions paid to rent it out, interest, insurance and rent paid for the timeshare. Repairs, utility expenses, local transportation and travel expenses related to renting it may all be claimed.


For investors, losses are another tax advantage allowed for timeshares. Deposits lost from the bankruptcy or insolvency of a financial institution usually may be claimed as deductions. These types of losses are considered ordinary loss, casualty loss or nonbusiness bad debt. If the funds were federally insured, the loss may be claimed as an ordinary loss. If making a casualty loss claim, claim the loss on Schedule A, Form 1040. Claim casualty losses on Form 4684. Report nonbusiness bad debt on Schedule D, Form 1040 in the year in which the loss occurred.

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