Maybe you thought timeshares were a thing of the past. Hardly, they had sales of more than $9 billion in 2016.
Timeshares have appeal. You get that “dream” vacation property and share the costs of ownership with others. Sounds good, but there’s more to the story.
The perks: Pay your annual maintenance fee and someone else handles the repairs, insurance and other details. A timeshare can be a source of rental income during unused weeks. Depending on your agreement, you may be able to swap your property with properties elsewhere.
“Timeshares allow people to vacation in exotic places they couldn’t afford on their own,” says Joshua Zimmelman, president of Westwood Tax & Consulting in Rockville Centre.
The pitfalls: James Tupitza is frank. “You’re trapped with a perpetual liability. Eventually, you’ll need to hire someone to get you out of the mess,” says the attorney with Tupitza & Kalia in West Chester, Pennsylvania. “If I had $10 for every child who calls me to get rid of a parent’s timeshare, I could pay off my mortgage.”
Buyer beware. “Sometimes, timeshare sellers make promises that are too good to be true. If the timeshare development is outside the U.S., you won’t be protected by American laws. Don’t jump into a purchase blindly. Have a lawyer look at your contract,” says Zimmelman.
Timeshares can be harder to resell than fully-owned properties. There may be rules in your contract restricting sales or giving management companies the right to control or restrict new buyers. Says Zimmelman, “Know what you’re getting into before you buy. Don’t wait until you need to sell to realize you’re stuck in a bad situation.”