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Do You Have To Have An Appraisal To Sell A Timeshare Property?

Do You Have To Have An Appraisal To Sell A Timeshare Property?

It is recommended to receive an appraisal when trying to sell a timeshare property due to various tax implications and state and federal regulations. Depending on how long the timeshare is known appraisal may be a necessary step especially if there is potential for a significant profit. Selling timeshares have many of the same requirements as selling more traditional residential or commercial properties and therefore adhere to many of the same rules for tax reporting improper disclosure.

When selling a timeshare property, determining whether or not an appraisal is necessary is often based on the age of the development question. What this means is that older properties which may be in a certain date of disrepair may need a proper appraisal to determine the fair market value for both resale tax purposes. With regards to newer timeshares, the market price paid for prices for similar properties in the area will sometimes provide enough information to determine whether or not the asking price is appropriate.

Having an appraisal when selling a timeshare is usually most relevant when it comes to federal and state tax. This is because individuals you through neglect, ignorance or fraud will try to use the lack of an appraisal to their advantage especially when dealing with parties that there are you familiar with. So a person A purchase timeshare 10 years ago for $100,000 and the condition of the property is like new they may try to sell to a friend, family member or business partner for $110,000 even though the appraised value of the property may be $150,000. Obviously the person selling will appear to only have made $10,000 while the purchasing party will pay far less than they should have. It is that possible that the two parties have colluded to work out some arrangement with the additional $40,000 is distributed in an improper non-taxed manner.

Timeshares are treated like more traditional residential and commercial properties when a mortgage is taken out and the loan originator wants a guarantee that the property is being evaluated at its fair market value. This is to ensure that the mortgage lender, if they have to repossess the timeshare, has obtained the property at an appropriate price had not overpaid for the timeshare as a result of fraud. Just like any other property sale, federal and local government will want to know if profit has been realized by the seller and the owner is paying appropriate property taxes. So the answer to the question of do you have to have an appraisal when selling a timeshare property is more often than not going to be yes. Appraisals are reliable means, assuming there's no fraud or collusion, of guaranteeing that all parties involved with the timeshare are paying appropriate taxes on the sale.

Image by: Adam Mizrahi