Time share type tax question?

Question

The Seashell vacation club is like buying points towards going on a vacation. Sort of like a timeshare. You have partial ownership on certain properties that they own.

My question is, if my husband and I went to buy a home would this be considered negatively when attempting to get a loan or looked at like a vaction home

? The balance is $10,000.

Also, is this considered commercial property? Tax deduction?

Thank you so much in advance.

Answer 1

no and yes it is tax deduction

Answer 2

If you go to get a mortgage, any existing debt is looked at, so this could affect your ability to get a mortgage or the amount you would qualify for.

On a timeshare you can deduct interest if you itemize, and consider it your second home.  So if you actually own the right to a week at a particular property, you could most likely deduct any interest on the loan, although not anything that goes toward paying off the principal amount.  From your question, and from a quick look at their website, it isn't clear that's what their situation is.  If what you actually have is the right to a week at any ONE of their properties, not a particular one, then you can't deduct it.  If you own a week at a particular property but can trade it off for time at another property if something is available, you probably can.

Answer 3

The $10,000 balance will be looked at in terms of whether or not you can afford more debt.

As for the counting the club as a second home (so you can claim the interest as mortgage interest), look at what you own. With a specific unit you can count it as a second home even if you don't actually use it it and use someone else's unit. Without a specific unit, you can't.

Answer 4

It would not be any more of a negative than $10,000 debt for anything else.  As for the deduction it is not if you are just buying points toward a vacation.  If you in fact own a share in the real property than you can take a deduction for the Property Tax and any interest you pay on the mortgage.

Answer 5

Mortgage interest and real estate taxes on timeshares is deductible as long as the timeshare meets the definition of a second home.  That means you would have to have an ownership interest in a specific property (for example, if there are 52 owners of a property, with each being allowed to use it for 1 week a year).  It would not be commercial property, although it could be rental property if you sublet the property and meet the personal use limitations.

Conversely, if this is the kind of timeshare which simply guarantees you  use of a property owned by someone else for a week a year, there is no deduction.  Based on the additional information you provided, this sounds like the case in this instance.