Q. Regarding time share owners, let’s say they owe $45,000 and association dues are $1,000 a year. You have advised they could donate a time share to several organizations. How do you donate an obligation (mortgage) to anyone? Owning it debt-free and “donating” it makes sense, but not donating it when you owe $45,000.
Incidentally, I own four time shares, which I bought on the secondary market for as little as $100, and not more than $1,500 each. They are a great deal if you use or trade them. I agree that buying time shares from developers is almost always a stupid action, but there are many good things about time shares.
By trading time shares through one of the time share programs, I have had many weeks in different places. I am not a time share salesman or the representative of any developer.
The best source for cheap time shares is from time share homeowners associations where owners have stopped paying their monthly fees and deed the units back to them. Another simple way is a classified ad in the local paper offering to donate a time share.
A. You are correct that it will be difficult to donate a time share that has an underlying mortgage. Actually, from my readers who currently own time shares, I have been learning that it is difficult to get rid of one regardless of whether there is a mortgage.
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You have been lucky with your purchase, and I know there are many happy time share owners. However, I believe you are in the minority. Most of my readers are very unhappy and are desperate to rid themselves of that financial burden.
My advice if you happen to have an interest in buying a time share: Don’t fall for the representations of the smooth-talking salesman.
Get a copy of all documents that you will have to sign and have them carefully reviewed by your attorney. If the salesman says you can’t take the documents with you (as happened to me once when I was doing some hands-on research in this area), walk away.
Q. In a recent column, you answered a question from a woman who needed to find affordable housing. I suggest that she contact her local Habitat for Humanity organization. They will work with her and her fiance to build a home for her that is handicapped accessible. Yes, she will have to put in some “sweat” equity, but it doesn’t have to be “hammer and nails” type of work. Habitat will allow both of them to work on fundraising projects like bake sales or social events.
A. Thank you for writing and for your suggestion. I cannot (and will not) endorse any particular organization because there are many such programs out there that assist people with housing needs. You mentioned Habitat for Humanity, and I will let my readers do their own research and make up their own mind as to whether that program fits their individual needs.
QIf a new appraisal of real estate is done at the time of the death of one of the owners, my husband, will that give a stepped-up basis for computation of capital gains taxes rather than the original purchase price when the property is eventually sold? Our house has more than doubled in value since we bought it.
A. Congress is currently struggling with major tax issues, one of which involves the “stepped-up” tax basis. Basis is generally the price you paid for the house. To determine your profit (called “gain”), you take your basis, and add any major improvements you made over the years. That is called the adjusted basis. You take your sales price, deduct such things as real estate commissions, and get the adjusted sales price. Your gain is the difference between the adjusted sales price and the adjusted basis.
Up until the end of 2009, the tax law said that on the death of a property owner, the basis of the inherited property was its value as of the date of death. In other words, the basis was “stepped up.” However, for 2010, this “step up” is not applicable. Instead, heirs assume (or carry over) the basis of the deceased owner, but can elect to increase that basis up to $1.3 million. In your case, since you would be a surviving spouse, the basis can be increased by an additional $3 million.
This really does not affect middle-class Americans unless the house is extremely valuable. But depending on what Congress does this year, the old stepped-up basis should be back on the books in 2011.