Higher Donation Credit Process

The IRS is explicit in how they will allow credit to be given for timeshare donations.

1. They will NOT allow you to write off the cost of your timeshare as an investment loss.
2. They will NOT allow you to take a donation income deduction greater than $5,000 except under special circumstances.
3. They will NOT allow you to take a donation credit hgher than what you paid for your timeshare.
4. If your timeshare is sold within 36 months by the recipient nonprofit organization for less than the credit they awarded you, they are require to notify the IRS and you of the over credit they gave and you are required to make up the under payment of taxes based on too high a donation credit.
5. If you wish to receive the full $5,000 income deduction credit, the nonprofit organization must hold title for the full 36 months or sell it for at least that amount to someone else.
6. To receive a higher than $5,000 donation credit a nonprofit is NOT authorized to sign the IRS Form 8283, a licensed appraiser must sign it.
7. Here's the steps and numbers you must go through to get a higher deduction.
   1. Find an appraiser in the area of the resort that is licensed to provide certified appraisals and sign the IRS Form 8283
   2. Make sure they will use the resort pricing for evaluation, not Internet or distressed sales prices (huge difference!) - Call and discuss this with them. Many will not.
   3. Pay their $350 to $500 fee in advance.
   4. The appraiser will (at best) use a combination of resort and other sales to arrive at a current sales price of about 70% to 80% of what the resort is currently selling equivalent timeshares for.
   5. The appraiser will then discount that price by 15% to 25% for marketing and promotional expenses.
   6. The result will often be about a value of 60% to 70% of the current resort price.
   7. They will then issue you a report and send you a signed Form 8283.
8. Here's how the numbers work out for a break even consideration.
   1. Assume you are married filing jointly and making $63,700 to $128,500 per year. You are in a 25% tax bracket.
   2. You bought the timeshare for $12,000 and the current resort price is now $13,000
   3. The appraiser will at best give a valuation of 70% - $9,100
   4. Without the appraisal you would have taken a $5,000 credit. With the appraisal you can take the $9,100 income deduction.
   5. At a 25% tax bracket you would receive
      1. $1,250 for the $5,000 non appraisal process
      2. $2,275 for the $9,100 appraisal process but you must deduct your cost of the appraisal of $500 for a net of $1,775
      3. You made an extra $525 in tax return by going through the trouble of finding a cooperative appraiser, paying their fee and being able to prove to the IRS your timeshare was worth more than $5,000 even though you bought it for $12,000 and it's selling currently for $13,000.