Timeshare presentations include free cheap vacations, free gifts or free meals, including champagne breakfast, not so fast. They are not really free. Because of the high pressure sales it is essential that you do your homework before attending a timeshare presentation, and don’t buy on a whim. Understand the true meaning of a timeshare and read the contract before you sign under pressure. Most timeshare buyers buy under pressure while on vacation or walking through a mall to get an invite to a high pressure sales presentation.
I often get the question, should I buy a timeshare to save money on taxes and own a wonderful place to vacation?
After talking to a friend who did tax audits and was assigned to an 8 inch thick stack of timeshare tax foreclosures I decided to look further into the timeshare craze. I even went as far as to spend a week in a timeshare condo owned by a friend and attended a high pressure sales presentation.
The Definition of a Timeshare
The first thing you need to know is that when you purchase a time share you are purchasing the right to use a vacation room or condo typically for 1 week a year. The quality of available condos go from type A to type D. A, of course being the nicest and best equipped. You do not own a share of the building, you do not own a room, and you definitely don’t own the land that the condo is built on.
Typical Timeshare Cost
When you sign a contract for a timeshare you are promising to pay in full the contract price of the time share, the interest payment, and the yearly maintenance fee. The payment is usually from 8-12 years. The yearly tax and maintenance cost is for life. For some strange reason most timeshare presentations don’t make it clear that the buyers have to pay maintenance for life and the maintenance goes up over time.
If You Don’t Pay The Time Share Loan Principle And Interest Payments
If you don’t pay the time share principle and interest payments you will be sent to collections, and if the balance is not paid from collections, you will be foreclosed on. If your time share is paid off and you do not make the yearly tax and maintenance cost your time share will be sold for back taxes.
How Most Buyers Find Out About Timeshares
They go on vacation, on a honeymoon, or just stay at a resort hotel. The company who owns the hotel may also own timeshare unit building. They will offer a free $100 bill, or a free lunch, or a free dinner to coerce you into listening to a timeshare presentation, which is usually a high pressure sales presentation. The company gets back the “free stuff” many times over when you make payments on the timeshare loan and the lifetime tax and maintenance cost. So, once again, you learn, there are no free lunches.
The Motivating Factor For Buying a Timeshare
High sales tactics make some buyers think they are actually purchasing ownership in a condo unit. Some people are motivated by the false tax savings. Because of the ease at which you can purchase a timeshare many people who buy them either, do not itemize for tax savings or are in too low a tax bracket to actually receive a savings from the timeshare. For those in higher tax brackets the tax savings on a timeshare is too small to make a difference. Another reason people buy timeshares is because they enjoy the vacation swaps, that is swapping timeshares with others to vacation in different locations. Some timeshare presentation vacations sales are simply fake.
When Buyers Falter On Their Time Share Payments
Some people don’t understand the obligation they are under when they sign up for a time share because 1. They sign up under pressure, 2. They sign up quickly and don’t understand what they are buying, 3. Some are young and gullible, so they sign up without the knowledge of contracts, 4. Many people don’t understand that they have to pay taxes and maintenance cost every year for life. At any of these points people falter on payments, especially on the lifetime maintenance and tax cost usually paid in lump sum each year.
The best way to get out of your timeshare contract during or after your vacation is to realize you usually have a 3 day right of rescission on contracts.That must be in writing, preferably notarized, and sent next day mail, certified. Rarely, does anyone realize this, or use this tactic.
Typical charges of a Timeshare
I have friends who bought a time share 16 years ago, they said they purchased theirs for $17,000, for most of the 16 years their yearly tax and maintenance cost was $500 per year, a year ago it changed to $1000 per year. That is a class A Timeshare, the highest value.
Currently, a typical Class A time share is in the area of $25,000 principle or more, plus interest, and $1000 per year (lifetime) payments for tax and maintenance. There are different packages available.
Selling A Timeshare Condo
Selling a timeshare is difficult because you don’t have the same high pressure sales tactic abilities that enabled you to sign. The market for used timeshare contracts is tiny, especially since you are competing against current new timeshare sales. But, there are companies who exit your timeshare contracts, and they may be helpful. Do your homework, and make sure the company is legitimate. In recent news reports many who have used these companies say were ripped off, and their contract was still in tact after they paid the company. The organizations representing these people say it is best to negotiate directly with the timeshare company to exit your timeshare contract. You do not have the expertise to do a timeshare presentation on timeshare vacations – you have no such company.