Hello again Leo,
Thank you for the additional information. That helps.
Your loan payoff was included in the transaction which is why you ended up with a $3,000 check. But that is not a gain to you.
The only figures that really come in to play here are the price you sold the timeshare for and the price you paid for it. And based on those figures you had a loss of $5,600. The $3,000 check you received was what you were owed after paying off your remaining loan balance, but that does not represent a gain to you.
In other words, when you originally bought this timeshare you made a downpayment and then financed the rest, and of course you continued to make monthly payments on the loan. When you sold it, you still had a balance due on the loan, and so the proceeds of the sale were first used to cover the balance due on your loan, and then you got a check for the difference. But that is not a gain for you. That is just a partial return of your original money paid on the loan. The fact remains you simply had a $5,600 loss here.
But the loss on the sale of a personal asset is not deductible, so you have no loss to claim here for tax purposes. But you also have no gain to pay taxes on.
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Thank you Leo