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Community Health Training, Inc.
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Copyrighted
06/14/2010

CHT, Inc.
Las Vegas, NV
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We Buy Timeshares
Details

Have we got your interest yet?
Do you have a few questions?

Here's what other people ask.

Who and what are you?
Do you have an example to see?
Why can't I do this with any other nonprofit organization?
Does this work with any timeshare?
How can I figure out the donation credit?
How does CHT determine the value of my timeshare?
Can't I just claim my purchase price as an investment loss?
Is there a cost to doing this?
Are there any regulations I should be aware of?
Is timing an issue in donating my timeshare?
Why can you accept the timeshares?
What do you do with the timeshares?
What about using this year's vacation time?
What do I get ?
What do I need to do now?
What else can I do besides donate?


Who and what are you?
We are a federally authorized nonprofitorganization with the ability to accept donations and grant credit for those donations to the donor to use against their IRS tax bill. Click and check us out at: IRS Exempt Organization Search
Click on the button for " "
Fill in the EIN: 46-0479662
Click on the "Search" button.
You'll see we are listed with the IRS.

If you donate something to a church, the Red Cross, The Boy Scouts, Make-A-Wish Foundation, us or any other similar tax exempt organization this is how it works. The item is valued at fair market value based on similar items being offered on the market. That value is presented to you as a dollar value in a receipt as a donation. When it comes time to pay your taxes, you can deduct from $0 up to the amount of the receipt ($5,000) from your gross income. The amount is totally your choice.
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Do you have an example to see?
You bought you timeshare for $12,000 a few years ago. The resort is currently selling the same timeshare for $15,000 with the same benefits you received. You've tried paying $595 to list it on the "BEST" web site for resellers without success for $2,000 and still can't find any takers. Each year the same ownership fees roll around and you have to pay the $650 or be sent to collections for it - not good. (That means in one year, you'll end up with about $800 if you do sell it.)

We compare what you bought it for at fair market value and compare what the majority of current sales for similar units are being sold for at fair market value (almost all sales are by the resort). As such we can honestly state that the fair market value for your timeshare is $15,000 since that's what the majority of sales are being completed at, not those forced sales most listing companies deal with. Those are few and considered abnormal forced sales.

Legally, the IRS limits all charities to a maximum $5,000 donation credit. However, if the charity sells or transfers title within 36 months, the actual cash received is what can be granted. If you got an original $5,000 credit and the charity sells it for $500 they MUST send the IRS and you a notice saying you received too much credit and might have to repay some of the nice refund you got for the big donation.

A licensed appraiser can be used to increase the donation value. That will cost you extra money and must consider other issues. We have IRS regulations available for owners to provide to potential appraisers that encourages them to give higher appraisals based on current resort sales, not current resale prices. Although we have nothing to do with any specific appraisers (they must be from the area of the resort), we have found that with prior knowledge the donor can often question and find an appraiser that will give them a good appriasal. We provide that knowledge to the donor.

You receive a donation credit for $5,000. After all other deduction and exemptions you have an adjusted gross income in the 25% tax bracket. That means you will receive $1,250 back as a refund or not have to pay that much in taxes if you need to pay. The way to find this number is check you taxes to see what tax bracket (percentage%) you are in. Multiply that % x $5,000 = cash you get from the IRS.
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Why can't I do this with any other nonprofit organization?
You can, kind of. They won't accept it the same way. You see, when anyone accepts your timeshare, they also accept the requirement for continuing payment of the ownership fees each year. There have been stories of churches accepting them from members and then having to try to raise thousands of dollars each year for this expense alone. You see, they can be sent to collections just as any individual can and that creates problems for them.

An article was written on BANKRATE.COM, a free professional financial web site for news, tips and advice to compare mortgage rates, home equity loans, CDs, car loans, credit cards and money market accounts. The article was Down to your last resort? Donate your time share (click to read the details). It stated ". . . The American Kidney Fund started taking time-share donations . . . So far, the organization has received 173 donated time shares, sold 26 and rejected 47 . . . The least-expensive property sold for $75, while the priciest was just less than $6,000. The average sale price is about $1,400, which generates about $825 for the organization. (According to) the American Institute of Certified Public Accountants. 'Fair market value would probably be measured by what they get for it.' " That same average $1,400 would generate a $350 tax return for a person in the 25% tax bracket.

Also, if they do resell it for less then the credit they gave you within 3 years*, they are required by law to inform you and the IRS of the reduced amount so you can correct your return and pay higher taxes on the higher adjusted gross income. In other words, if they sell it for $1 you end up only being able to deduct $1 instead of whatever they originally gave you credit for. That gets you about 30¢ back in tax return. All you have to do is give the IRS back the other $349.70 you got overpaid in your tax return. This is by law the way they are supposed to do it. *(Read the bottom of IRS Form 8283 - Noncash Charitable Contributions in the instructions for Form 8282 - Donee Information Return, it references, They are required to sign and present Form 8283 to you if they grant you more than $500 in donation credit.)

There are many good nonprofit organization that will accept your timeshare on a similar process. Because they understand the liability involved, they will let you continue to hold it and continue to pay all the expenses while they turn it over to their broker to sell on the secondary market for a quick sale - usually cheap. When it finally sells, they will take immediate and temporary possession (about 2 minutes for paperwork) and give you donation credit for the sale price. They usually get to keep from 50% to 65% of the cash for themselves. The broker gets the rest. If that's the process, why don't you just contact a broker directly and sell it on a commission basis and either keep the money or donate the cash directly yourself?
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Does this work with any timeshare?
NO!!!!. It must be a deedable real property. Vacation memberships are a totally different matter. Timeshares that are based on points, club membership, etc. and are not directly attached to a specific timeshare unit, week and are not recorded in the country recorder's office by deed. Such things must be dealt with as a contract, not as real property. Sneaky resort owners have set up "timeshares" like these and include clauses that require no cancellation for a number of years and even state that they must be passed on through up to three generations. That means that your grandchildren will be required to pay the yearly fees on a contract that you sign. Some "timeshares" have even been set up to look like a real property by setting up a specific unit, week and have a recording of the contract ( any contract can be recorded) but there is a time limitation on the ownership - say 30 years. This is actually a long term lease, not an actual ownership of true deedable real property.

On the other hand, a true timeshare is a deeded real property. It is recorded at the county seat. It is part of an estate and continues forever.
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How can I figure out the donation credit?
Actually it's a little complicated but let's look at the process. A fair market value has to be established for the timeshare. This is done by one of three methods. 1.) What do similar timeshare units sell for on the open market (remember that the majority on the open market are sold by the resort NOT by the cheap brokers); 2. How much income can be generated by the timeshare unit (if it's for rental purposes); and 3.) What is the cost of replacing the timeshare unit if another similar one had to be bought on the open market (again, how many are available and where would you probably get it). Next, you must take the donation credit as a write off of your income for the tax year. To do this you must use Schedule A to itemize your deduction. It's not hard, just a little more time consuming that the 1040EZ form. So if you want to check yourself on the value of the donation before getting involved with us, first determine what the resort is selling similar timeshare units for now. Next, figure out what tax bracket you are in and determine the same percentage of the value and that is what Uncle Sam and the IRS will pay you in a tax return for donating your timeshare. For example, the timeshare sells for $10,000. You're in a 23% tax bracket. You'll get $2,300 extra dollars back on your taxes next year.
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How does CHT determine the value of my timeshare?
We do the above to find the three valuations. Generally we find that there are FAR MORE timeshares just like yours being sold on the open market by the resort than by cheap brokers and desperate owners (#1). We, also, find that the easiest way to purchase a replacement would be through the resort. (#3). Income valuation generally doesn't apply (#2). We provide a copy of our research report to you along with the donation receipt. If the IRS were to ever come back to you and demand another appraisal you can insist that the appraiser do it the same way - based on actual numbers sold, not on cheap prices available. Although we are not licensed appraisers we do have a great deal of experience with both residential and commercial real estate and evaluation of such. If you really want to be concerned, call a licensed appraiser in the area of your timeshare resort and ask them if they would agree with the above inclusion of resort retail pricing based on actual numbers of "sold" timeshare, not just what prices are offered. This is how banks do it prior to any loans being made.

The ideal method is to contact the county recorder's office where the timeshare is and ask how to research actual sales of real estate (your timeshare must be a deedable real property and not just a vacation membership). Check the prices on the majority of those. That is legally how a professional appraiser should do it. This is one of the things we do when we determine the value of your timeshare donation.

On the other hand, the IRS says you can claim up to $5,000 deduction without any concern for an appraisal. They reserve the right to ask for the reasoning for your evaluation and can demand an appraisal if it's more than that amount.
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Can't I just claim my purchase price as an investment loss?
Not unless you want to have the IRS give you a whole lot of trouble. They are very strict about this. Read the IRS Publication 544 for all the details. Read our summary of quotes for a quick understanding. Click here.
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Is there a cost to doing this?
Yes and no. You have to put things in perspective. For the normal process, you would pay a fee to list your timeshare and HOPE that it might sell. You have already probably spent up to $1,000+ in trying that method with no results. If you donate the timeshare to a normal NPO, you have to wait for them to sell it and then they give you credit for the sale price (as per the IRS, that's what establishes the fair market value of your donation). Since we don't sell it, we can give you the full fair market value based on comparable sales (the resort sales program and price). Let's compare. You have a $10,000 timeshare you might sell for $1,500 in cash through listing services. The NPO might sell it through their broker and get $2,500 minus closing costs (about $200) in donation credit that is worth $575 ($2,300 x 25%) cash in your pocket from the IRS if you're in a 25% tax bracket. We give you $5,000 in donation credit which is worth $1,250 - $850 (average costs) = $400 in your pocket in that same 25% tax bracket. If you pay an appraiser $500 and with our information he can give you a licensed appraisal for $10,000 you end up with $2,500 - $850 - $500 = $1,150 cash in your pocket.

The listing services charge you up front costs ($1,500 - $395 fee = $1,105 net to you) and give NO guarantee of performance. The normal NPO takes as long as their broker takes and gives you the credit so you get to keep the $625 from your tax return. We ask for a $500 service fee at the time the property transfers to us plus your normal closing costs ($500 + about $200 = $700). You get your tax return of $2,500 - $700 for a net of $1,800 to you. Plus we can do it in as little as 30 to 45 days without the delays inherent in the other two methods. Faster service, quicker exit from your timeshare and more dollars in your pocket. Which would you rather have?
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Are there any regulations I should be aware of?
There are two IRS publications you should download and read. Both of these concern donations and your taxes.
Charitable Contributions
Determining the Value of Donated Property
For a detailed understanding of how the IRS views and handles timeshare donations read Timeshares and the IRS. If you prefer to have an Adobe Acrobat file to read with major quotes and comments of IRS regulations, publications and forms organized into an understandable and meaningful report. Go to Timeshare Donations and IRS Regulations.pdf
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Is timing an issue in donating my timeshare?
ABSOLUTELY!!! There is a key requirement that is time sensitive. It is the billing date on ownership fees. Like other real estate transactions, nothing is complete until the actual recording date printed on the new deed by the county recorder. Or in the case of a contract with no deed, the date the resort registers the contract transfer. Until then the donor is 100% responsible for any and all bills regarding the timeshare. A bill is legally considered as due and payable immediately even though it may have a later due date listed or a late date listed. The day the bill is sent out is the date of the bill. In a court of law, if the bill is sent out prior to the recording date on a deed, the donor was responsible on the date the bill was created and is still responsible unless the new owner AND the billing company agree in writing to transfer the obligation to the new owner. THIS IS VERY IMPORTANT!

This is why an amount equal to the expected bill is required prior to closing even if the bill is normally not sent out until a later date. Neither we nor you, the donor, want to do anything to delay the process. However, sometimes the resort and/or the county recorder's office (or legal office) causes a delay. Normal closings take about 3 months. Fast closings have been done in as little as 3 weeks, but they are rare. Some take 9 months. Because of this and to protect the donor from potential ligitagion for an unpaid bill created prior to the recording date, the closing company will ask you to escrow additional money to cover this potential bill if closing is delayed. If closing is recorded after the billing date, the money is sent to the resort to make sure you are covered for payment. If closing is recorded prior to the billing date, that money is refunded back to you. Just remember that on the date the bill is created, you, the donor, are responsible for it and will have to pay it regardless of what happens after that date even if the bill has a later due or late date printed on the bill.
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Why can you accept the timeshares?
We have been specially set up and designed to do so. We do not face the same risks of collection other organizations do. We do NOT resell the timeshares.
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What do you do with the timeshares?
The first consideration is if the dues are paid up for the year and there is still time left to plan a trip to that timeshare unit and week. If so, we work with other national and local nonprofits like St. Jude's Hospitals, Make-A-Wish Foundation, Shriner's and others to let them use them free for their client families since many of them could never afford such a resort vacation. Those organizations can use it for actual clients or use it to generate cash by renting, raffling, or using it as a fund raising incentive.

Beyond that, we sit on them. IRS law specifies that if any donation is transferred within 3 years the donor and the IRS must be notified about the valuation change. So we wait for 3 years. If the resort has agreed to make the timeshare available for the following 2 years for the same nonprofit purpose, we agree to deed it back to them at the end of the 36 months at no cost or hassle. That essentially gives them very good publicity and only costs them (not counting the lost revenue the wouldn't receive anyway) about $100 each year for cleaning the unit following the week's use and the minimal utilities used during that week. In other words, for about $200 they get it back in 36 months and get good publicity at the same time. We even help them in getting the word out to the media in their name. If they don't cooperate they sometimes come to us to work out the transfer of the unit back to them in exchange for release of all obligations, they can then resell it at full price to the next unwary buyer that comes along. After all, they counted on getting your $650 for the next 50 years (= $32,500). They are motivated to deal with us. Their normal threats to you have no affect on us AND you're gone - FREE forever after.
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What about using this year's vacation time?
If there is available use in the year the timeshare is donated, we ask that it be transferred with title. However, if the week falls before the actual title transfer date, make sure you use it yourself. We can't access it until after we gain title.

We will make sure it is used. When a week is available, we contact local organizations like fire and rescue, shelters, family services, etc. in the area and offer it to them as a bonus for their local community work. They often make it available on an auction basis, profide it to a worthy service person, or sometimes set it as a retreat.
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What do I get?
Besides the donation credit, tax deduction, dollars in your pocket from the IRS and ultimate freedom we've discussed above, here is a sample packet of the documents you receive when we are done. It doesn't include the title transfer and closing documents because those are different in each state.
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What do I need to do now?
Click here for the requirements and steps involved.

What else can I do besides donate?
The simple response is you can sell, but if you are at this site you probably have already tried that. There are several other suggestions you will find at our blog. Titles like:
Timeshare Swaps - Creative Timeshare Travel + $0 Exchanges Fees
Timeshares - Rent to Sell
IRS Looks at Loss Claim on Real Property
And more being added as time permits and ideas blossom.
You see, our purpose is to help owners, not just to collect timeshares and service fees. Frankly, if we lose a client to one of our ideas, we have still been of service and would appreciate a short note of how it worked for you. Click here to go to our blog.

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