Timeshares Are Not an Investment … How Many Times Do They Have to Say It?
Saturday, November 21, 2009
The website InvestorWords.com gives us these definitions of the word, “investment”:
- Definition 1
In finance, the purchase of a financial product or other item of value with an expectation of favorable future returns. In general terms, investment means the use money in the hope of making more money.
- Definition 2
In business, the purchase by a producer of a physical good, such as durable equipment or inventory, in the hope of improving future business.
Over the past six years, since Sell My Timeshare NOW was first founded, we have written, stated, tweeted, and probably shouted from a few rooftops, “timeshares are not an investment.”
Timeshares are a fabulous way to vacation, offering ease of vacation planning, spacious accommodations, and amenities to suit every member of the family. But you should not buy timeshare because you expect to be able to resell it at a higher price. And our legal system, including the Securities and Exchange Commission takes a dim view of people who try to tell you otherwise.
Case in point from this week’s Legal Newsline:
A company described as a Nevada based timeshare ‘repurchaser’, Apex Professionals, LLC, will be paying more than $120,00 in restitution and penalties to settle a claim filed in the Vermont courts.$64,000 will go to 15 Vermont consumers while $65,000 will go to the State of Vermont in penalties, costs, and alleged violations.
“If out-of-state companies offering an economic benefit to consumers in Vermont violate the state’s consumer laws, they can expect strong enforcement and serious consequences,” says the Vermont Attorney General, William Sorrell.
Here’s what got Apex into so much trouble. Last March, their representatives met with timeshare owners at a Burlington Hotel, and again in May at a hotel in Montpelier. The attendees had responded to a postcard that read, “Don’t play the waiting game in this economy! If you accept our offer we will put your timeshare into closing immediately.”
Apex wanted timeshare owners to transfer their timeshare to Apex, which would then relieve the owners of ongoing timeshare maintenance fees, taxes, and related costs. Timeshare owners at the meetings expected to receive money for their timeshare in the timeshare transfer process—instead, they were charged a fee for the timeshare transfer.
But they were told, (and this is what made it easy for the Vermont Attorney General to put the hammer down) that the payment they were making to Apex (usually several thousand dollars) would be deductible on their federal income taxes as an investment loss. And with that one claim of timeshares being an investment, the path was cleared for easy legal action against Apex.
This story comes packed with lots of lessons.
- Don’t take tax advice from anyone who is not certified to provide it.
- Don’t transfer your timeshare to anyone or any company on a promise.
- And most importantly, if it seems too good to be true… don’t believe the hype!
Yes, you can resell your timeshare. You can also donate your timeshare, give it away, or use it as a timeshare rental, and these are all strategies for offsetting or eliminating the cost of continuing to pay annual fees on a timeshare you no longer use. But before you take any of these actions, make sure you are dealing with a reputable timeshare resales advertising company or timeshare brokers who are giving you a reasonable and accurate picture about timeshare resales.