At Tax Time, A Final Kiss Goodbye From Your Former Timeshare Developer

So, it’s early into your new year, and you’re still feeling giddy about last year’s financial ‘win,’ when you and your timeshare developer ‘shook hands’ and agreed to go your separate ways. At last the bleeding has stopped! Your holidays were no doubt a bit brighter because of the extra cash you saved from the negotiated termination of your timeshare obligation.

You grab your mail from the mailbox, expecting some extra holiday charges on your credit card bills, knowing you have a little extra cash to handle it. Suddenly you spot the unexpected envelope from your former resort and tear it open. Nope, it’s not a belatedly sent holiday card, it’s an IRS form 1099, (either an “A” or a “C”), and it is advising you that this form must be filed with your tax return because the resort has already sent the IRS a copy.

But what exactly does this mean? There’s an amount listed on the form, and it is a significant number. It seems that via this document, your former resort is advising the IRS that this is the amount of the debt of which they have so generously forgiven you. You, per this 1099 form, apparently previously owed this amount to your timeshare resort, which if you had continued to pay per your former contract obligation, would have been paid out to them over the remaining term of the promissory note, over whatever the timeframe that you had remaining on your timeshare mortgage. But why is this now the IRS’s business?

The Timeshare Trends to Watch in 2018

There can be no denying that the timeshare industry is a behemoth.

The American Resort Development Association (ARDA), an industry trade group, estimates that the industry is worth roughly $8.6 billion – putting it in the conversation with the music industry ($7 billion) and even Major League Baseball ($9 billion) in terms of revenue. By ARDA’s estimates, nearly 9 million households own one or more timeshare products, in the form of weeks, points, or fractional ownership. That’s nothing to sneeze at.  

The bottom line is that this industry is like a big, ironclad ship. And as any salty old sea captain could tell you (and we’ve got plenty of them here in our home base of Florida), big ships can be supremely difficult to turn around.

But, with that said, every industry is susceptible to its own ups and downs. Sometimes, it can be hard to tell which way the winds are blowing – until they’ve already bowled you over. But in other cases, keeping an eye on the forecast can help set you down the right path.

With that in mind, we may be able to make a few educated guesses about what the future may hold for the timeshare industry – or, at the very least, point you toward the developing narratives and industry conversations worth keeping tabs on.

'My Main Problem With My Timeshare Is Making Reservations. What Are My Legal Rights?'

When you own a timeshare interest, you’re subject to certain unavoidable fees, including assessments and annual maintenance payments, which tend to increase, year over year.

For what owners pay, there is an expectation that, at the very least, being able to use one’s timeshare weeks or points should be a relatively straightforward, easy process. In practice, however, it is not uncommon to hear from timeshare owners who face major struggles when it comes to booking and using their interest.

It raises the question: “If your main problem with your timeshare is making reservations, what are your legal rights?”

'What’s the Difference Between Deeded, Leased, or Right-to-Use Timeshare Interests?'

Plenty of timeshare owners sign up for their interest with a vision of an annual vacation at a luxurious ‘home resort’ dancing in their heads. Others are willing to take on the obligation of timeshare ownership in order to exchange their weeks or points for stays at resorts across the country, or even around the world.

But for many more timeshare owners, the question really is – “what did I actually just sign up for?”

Historically, there have been three primary flavors of timeshare ownership – though today, in practice, essentially only one is still in favor among major resort developers. Those types of ownership are “deeded,” “leased,” or “right-to-use” (sometimes called “points-based”) systems.

So, our hypothetical consumer might now ask, “What’s the difference between deeded, leased, or right-to-use timeshare interests?”

'Will My Timeshare Maintenance Fees Increase?'

According to reports from ARDA, maintenance fees tend to be among the pressing factors driving timeshare owners away from the industry, with 50% of owners who are planning to sell doing so because they “no longer want to pay the maintenance fees” and 46% of timeshare owners who are seeking an exit citing high maintenance fees as their “most important” reason.

It’s easy to see why these annual fees place a major financial burden on many consumers.

For one thing, there’s the fact that the vast majority of consumers do not own a deeded timeshare interest, but rather points, which buy them the “right to use” a resort property, rather than anything resembling actual real estate. What’s more, plenty of consumers either bank or exchange their points every year, rather than using the “home resort” for which they are ostensibly paying their maintenance fees. Why should consumers be on the hook for payments for a resort they have no ownership stake in, and which they, perhaps, have never used?

For another thing, there’s the matter that maintenance fees tend to rise, year over year, without ceasing. It beggars the question for many consumers: “Will my timeshare maintenance fees always increase?”

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