Timeshare Rental Income

[SO49]

I own a timeshare deeded in Florida. The ownership is based on the point system which allows my to use points for vacations at any of the resorts within the system. I used some of the points to rent 4 units, 2 in Newport, RI for 3 nights each and 2 in Atlantic City, NJ for 2 nights each. After general fees and commissions were deducted by the rental agency and resorts, both owned by the timeshare corporation, my net income was only 49%, yet I received a 1099-MISC from the rental agency for the full amount of the rental income. May I deduct the commissions and fees or do I have to pay taxes on the entire amount?

[MinhT1]

The IRS says in this document:

Minimal Rental Use

There's a special rule if you use a dwelling unit as a residence and rent it for fewer than 15 days. In this case, don't report any of the rental income and don't deduct any expenses as rental expenses.

[SO49]

Is it considered a "residence" if I stayed at a timeshare (in my case at several resorts) for more than 15 days during the year?

[ColeenD3]

Yes. It is considered a second home.

Rental Property / Personal Use

If you rent a dwelling unit to others that you also use as a residence, limitations may apply to the rental expenses you can deduct. You're considered to use a dwelling unit as a residence if you use it for personal purposes during the tax year for a number of days that’s more than the greater of:

1. 14 days, or
2. 10% of the total days you rent it to others at a fair rental price.

It's possible that you'll use more than one dwelling unit as a residence during the year. For example, if you live in your main home for 11 months, your home is a dwelling unit used as a residence. If you live in your vacation home for the other 30 days of the year, your vacation home is also a dwelling unit used as a residence unless you rent your vacation home to others at a fair rental value for 300 or more days during the year in this example.

A day of personal use of a dwelling unit is any day that the unit is used by:

• You or any other person who has an interest in it, unless you rent your interest to another owner as his or her main home and the other owner pays a fair rental price under a shared equity financing agreement
• A member of your family or of a family of any other person who has an interest in it, unless the family member uses it as his or her main home and pays a fair rental price
• Anyone under an agreement that lets you use some other dwelling unit
• Anyone at less than fair rental price

Tax Topic 415

[SO49]

I assume every 1099 is reported to the IRS. Am I being told to not even include the rental income as reported on the 1099-MISC from the rental agency, or will TurboTax ask me the necessary questions to eliminate my tax liability if I do include it and fill out Schedule E?

[LeonardS]

Yes, every 1099 is reported to the IRS and you need to report your 1099-MISC on your tax return.  TurboTax will ask you the necessary questions to minimize your tax liability.

@TCNovice

[AmeliesUncle]

---

@SO49 wrote:

Is it considered a "residence" if I stayed at a timeshare (in my case at several resorts) for more than 15 days during the year?

---

For this purpose, no.

As was noted above, you would need to stay in that UNIT for the greater of 15 days or 10% of the days rented to be considered a "residence".

As such, the rule for no tax for a residence that is rented for less than 15 days does not apply to you.  That means you need to report the income and expenses (yes, report the full amount of income, then enter the commissions as an expense).

[WlkakkI]

TurboTax did not ask any questions regarding the 1099 ..  add or delete.  I received 1099 for timeshare rental. This amount was less than my maintenance, so it doesn't seem logical to consider as income.  The situation arose because of restricted travel from Covid.  is there a way to offset this income on 1099 for tax purposes?

[PatriciaV]

@WlkakkI

Yes, you will need to report Form 1099-MISC on your personal return under Other Common Income. Search for "1099-misc" for a jump-to link to go directly to that section.

When you report rental income (box 1), TurboTax will create Schedule E for this income under Rental Properties & Royalties. Go to that section and complete the interview for your timeshare rental. This process will allow you to report any expenses relating to that property. If your expenses are at least as great as the income, you would have no taxable income. But, you need to enter this information in TurboTax in order to produce that result.

[JPH55]

I used timeshare points for three timeshares (two in Branson - same resort and one in Kauai) but only received one 1099-MISC.  In completing the Schedule E, I am doing one for each Timeshare since they are in two states.  How do I reflect the rental income for each separately since I only have one 1099-MISC.  Lastly, just to confirm, I only rented out one timeshare for 2 days, another for 2 days and the third for 3 days.  Does the less than 15 days rented apply or is that only if those are determined to be your home?

[RobertB4444]

@JPH55  If you want to separate the time shares then you just need to figure out what portion of the income on each 1099-MISC applies to each timeshare and then do the same for the expenses.

The 15 day rule only applies to your personal residence.

[SO49]

Thank you to all who replied to my previous questions, but I am unclear as to how to fill out Turbo Tax’s questionnaire. I got stuck at “location”.  Here is my situation, again, with some additional information and questions.

In 2021, I rented out 4 timeshare units (2 units for 3 days each in Newport, RI and 2 units for 2 days each in Atlantic City, NJ).  The rental agency I used sent me Copy B of a 1099-MISC for the total income the rentals generated.  

My timeshare ownership is deeded in Florida (The timeshare corporate offices are also based in Florida.) but, being points-based, is not attached to any particular unit or time period.  I pay maintenance fees and real estate taxes on those points, which are used to make reservations at any of the 100 member resorts, not just the Florida property, which I never even have to visit.  Last year, my family members and I accumulated 47 personal use days at various resorts, but only 4 were actually at one of the resorts rented out (Newport, RI).

Questions:

1. How do I list the location(s) in Turbo Tax?
2. If I have to use the Newport and Atlantic City addresses, do I list each one twice because there were two rentals at each location, or may I combine them?
3. Since I spent 4 personal use days at one of the rental locations (Newport), but 47 at various other resorts in the timeshare “system”, how do I report my personal use days?

This is the only section in Turbo Tax that is preventing me from completing my return, so if there is anything else I should know for my particular situation, I would appreciate that information as well.  

[newmaje5]

Thank You for this clarification.

[Glukowski1]

Did you ever recieve an answer? Struggling with this at the moment and no one seems to have an answer for me.

[PatriciaV]

The income you received from selling timeshare "points" must be reported on your tax return, usually as Other Income as this is not a rental activity. Go to Less Common Income and enter this as Hobby Income. This allows you to report related expenses, up to the total amount of income you report. Possible expenses include administrative costs for points sold, dues for belonging to the timeshare organization, and other incidental fees for marketing the points.

You don't need to enter income from Form 1099-MISC under that topic in TurboTax. As long as you include the income on your tax return, you have satisfied the reporting requirements.

@Glukowski1