GMAC Real Estate Second Homes and Timeshare Advice
GMAC Real Estate

Articles & Resources

Specialty Real Estate

Real Estate Calculators

Room Planner

Second Homes and Timeshare Advice

Takeaways

  • View a timeshare as a prepaid vacation, not an investment.
  • Don’t expect to recover any money spent on a timeshare.
  • A vacation second home offers more options and is a real investment in property.

Did you know?

  • There are about three million timeshare owners in the U.S.
Timeshares are prepaid vacations. If you are looking into vacation property options, you are most likely considering buying a vacation second home. You might even be thinking about getting into a timeshare. While a timeshare may work in your situation, remember that unlike a vacation second home, a timeshare is not an investment.

It's a Prepaid Vacation

The best way to view a timeshare is as a prepaid vacation. The money spent is an amount you can afford to spend, but like any vacation costs, don’t expect to recover that money. Timeshares are a growing part of the hospitality industry and are simply vacation properties owned by more than one person. Each member in the timeshare gets the rights to a certain amount of time at the home.

The problem with getting your buy-in fee back is there's a great deal of competition on the resale market. Companies that buy large amounts of timeshare resales often only get around 25% of the original value on the secondary market. Couple that sobering thought with the annual fees, such as for maintenance, and the exchange fees and it becomes apparent why a timeshare is not an investment.

Vacation Second Homes vs. Timeshares

Take that same money and put it into a vacation home you use in a limited enough fashion to have the real estate designated as an investment second home and suddenly all those maintenance costs are tax deductible. Any appreciation in the property is yours to realize at the time of a sale. And maybe most important, you can trade your vacation second home with all taxes deferred through a 1031 exchange, or if you can turn that home into your primary residence for two years, you can use IRC 121 and be exempted from most, or even all, of your capital gains tax on the sale

Search for Second Homes for Sale

To search for a selection of second homes for sale, please visit lifestylehomesearch.com, or visit the website of a GMAC Real Estate Office that serves the area where you'd like to buy a second home. To learn more about buying Second Homes or Vacation Homes, explore the rest of this section, or contact a GMAC Real Estate Agent.