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Anne, Master Tax Preparer
Category: Tax
Satisfied Customers: 2421
Experience:  Enrolled Agent with 25 Years Experience specializing Individual and Small Businesses
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My wife and I purchased a time share in Mexico in

Customer Question

My wife and I purchased a time share in Mexico in 2005 - this was our second time share purchase, the first having been located in the US and purchased in the 1990's.
Unfortunately, due to the erosion of security in Mexico in the years after purchase, and the fact that we had another to use, we never used the Mexico unit.
Rather than continue to have to pay maintenance fees, we returned the unit to the timeshare company in 2015, writing off the full purchase price of the unit.
My research shows in most cases that time share losses cannot be deducted, but I have found some info from a credible source indicating that if the unit has not been used by the owners, and has only been rented to others, that the loss is deductible as an ordinary (non-capital) loss.
Specifically, I’m looking for confirmation that I can I write off the loss, which I would calculate by taking current market value, less what I realized on surrender ($0).
Thanks very much for your help with this.
Scott Reiman
Submitted: 1 year ago.
Category: Tax
Expert:  Anne replied 1 year ago.
HiI'm Anne. I've been preparing taxes for 28 years and I'll be happy to help you. You could have written off the loss on the time share if YOU had rented it to others and reported that rental income on your taxes. The fact that you didn't use it does not change the character of the purchase from personal to rental. You must have a paper trail proving that you used the property as rental property. If you had, then yes, you could have deducted the loss. Since you never used the property at all, you will have a hard time convincing the IRS that this was anything other than personal. I know this was not the answer you were hoping for, but please know if there was any legal way to allow you to write off the loss on the sale of the property it would have been my pleasure to tell you so. If this answer has helped you, even though it was not the answer you were hoping for, (better I tell you than the IRS), then please take the moment to rate positive.It is ONLY through positive ratings that we are compensated for our time and knowledge. Thank you for choosing justanswer.

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