Ask the tax adviser By George Saenz • Bankrate.com

Dumping a timeshare

Dear Tax Talk:
I own a timeshare, an interval ownership condominium. My total payment for the timeshare was $5,000 in 1989. I'm paying a maintenance fee of $340 a year. In dealings with the owning corporation of the facility, I have tried unsuccessfully to sell the unit. Price ranges are from $2,000 to $400. I would like to abandon this property and declare a tax loss. Is this doable?
Larry

Dear Larry:
You may want to consider hanging on to that unit, since there is no tax benefit in abandoning it. A loss on the sale of a personal asset, including your home, vacation home, boat or automobile is never tax-deductible.

A second home that is a rental property can result in a loss, but you don't indicate that you've rented out your unit. If you began to rent it now, your basis for determining loss would be its value at the time you convert it to rental use, since it's less than your original cost.

If after a couple of years as a rental you decided to abandon the property, you might be able to claim the loss. But since you have the reduced basis, your tax loss won't be so great as to save more in taxes than what you would get from selling it. For example, a capital loss of a $2,000 may save you $400 in tax where if you sold for $2,000, you have $2,000 and no tax.

-- Posted: Oct. 3, 2002