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Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 28082
Experience:  Taxes, Immigration, Labor Relations
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I traded one timeshare in 2014. In determining

Customer Question

I traded one timeshare for another in 2014. In determining the cost basis for the previous timeshare, I am getting conflicting answers. Is the basis determined by the actual cost of credits purchased? -- or can the monthly maintenance costs be included?
I have answers for each resolution. thx, Ron
Submitted: 1 year ago.
Category: Tax
Expert:  Lev replied 1 year ago.
Hi and welcome to our site!Basis is generally the amount of your capital investment in property for tax purposes.In most situations, the basis of an asset is its cost to you. The cost is the amount you pay for it in cash, debt obligations, and other property or services. Cost includes sales tax and other expenses connected with the purchase.Certain events that occur during the period of your ownership may increase or decrease your basis, resulting in an "adjusted basis." Increase your basis by items such as the cost of improvements that add to the value of the property, and decrease it by items such as allowable depreciation and insurance reimbursements for casualty and theft losses. The monthly maintenance costs are NOT added to the basis.However if you pay monthly management fees - and some of these fees are used for improvements - that amount is added to the basis.For instance - if the management company replaced the roof - and part of your management fees specifically designated to your share of the roof replacement - that is classified as improvement and such cost is added to the basis.