What are timeshare rentals and how do they work?

Timeshare rentals is a vacation model that can help both, people who have a timeshare and those who want to check out the amenities of this vacation model without the hassle of ownership. Usually, timeshare rentals is done by the owners and they have direct communication with renters, but there are also agencies that can handle it. 

Rental rights

Before you rent out your timeshare, you should know if you’re even allowed to. Checking your contract and contacting your timeshare provider or a HOA, if there is one, can keep you in the clear. 

How rental platforms facilitate transactions

Platforms such as Airbnb, Koala or Red Week are part of renting timeshares. These can handle digital marketing, escrow services, vetting candidates, and rental contracts and agreements. Through them, you can also retain your control over the place, the pricing, and availability. 

Top platforms to rent your timeshare

There are some tried and tested platforms where owners and travelers can find each other and rent with the assurance of having a big company vouching for them. These platforms can be like RedWeek, where owners can rent or share, or something more public, like Airbnb. Continue reading to get a glimpse of how these work. One thing you should always have in mind though, is that you should look at your vacation club contract to ensure that you meet all the renting requirements or don’t have trouble with the policies.

RedWeek

The largest and most reputable timeshare renting platform. They work with some of the biggest timeshare providers, such as Club Wyndham, Hyatt Vacation Club, Marriott Vacation Club, amongst others. 

Koala

Koala is another platform that connects timeshare owners to vacationers. They help people find the best match whether they have unused weeks or points to ensure that everyone earns some money or time off safely. 

VRBO and Airbnb for timeshare

VRBO and Airbnb are two vacation rental websites where some timeshare owners can post their properties and manage their rentals. Even though all forms of vacation club renting need authorization from HOA or resort property, this might be the one that has the most pushback as it is the easiest to do by yourself.

How to rent out your timeshare safely

Whether you’re renting out your timeshare by yourself or having a third party company handle the process, following these four tips can bring you some peace of mind:
  1. Verify the renter’s information.
  2. Keep the communication open between all parties involved (owner, renter, resort).
  3. Protect your funds with an escrow service.
  4.  Create a rental agreement or notarized contract.

Payment protection and escrow services

Escrow services is a type of fund protection where assets are only released after specific conditions of a contract are fulfilled. In a rental agreement, this can be really useful for owners' to ensure that their property is not damaged and for vacationers' trust on getting what they paid for.

Usually, companies or platforms such as the ones discussed above have their own payment protection, making escrow services a moot point. But if you’re aiming to rent by yourself or you want to rent somebody else’s timeshare, using an escrow or payment protection services is the best way to protect your investment.

Screening renters and setting clear expectations

Screening potential tenants is essential to ensure that you are tranquil during their stay. Details such as their names, a government ID, number of guest, check in/out, payment methods and timelines, are essential to know who you’re renting to. This info can be gathered by a platform, or you can do it before creating any rental agreement.

Clear expectations are also important so that the renter does not break any agreement or policy from your contract.

Tax implications: How to report timeshare rental income

Generally, timeshare rental income is reported on Schedule E (form 1040). A big advantage of renting out your timeshare is possibly getting some money back if you’re not using your time there. But also, you could get some tax deductions on your rental income, which is notable because, as a rule of thumb, personal use vacation clubs are not deductible. 

Is timeshare rental income taxable?

Yes, timeshare income is taxable and reported on Schedule E (form 1040). This form is only for the use of business transactions and can help you deduct maintenance fees, property taxes and more. Check with your tax expert to see how you can use this form to write off some taxes, especially since local taxes change depending on location.

Deductible expenses and record keeping

Maintenance fees and property taxes are among some of the deductible expenses that you can write off. Timeshare mortgage could also apply, but you need to comply with the following:
  • You have itemized deductions
  • The loan is secured
  • The home must have sleeping, cooking, and toilet facilities
  • The debt can’t exceed $750,000

Timeshare ownership vs rental 

According to the American Resort Development Association, timeshare ownership is around $23,160, and $1,480 on maintenance fees per weekly interval equivalent. Meanwhile, according to Expedia.com, a vacation in Mexico can cost from $900 to $5,000 dollars for just a week. 

Having these numbers in mind, a question you might be asking is, what if owning a timeshare isn’t the best move? What if renting would save you money while opening your travel options?

That’s for you to decide. But if the financial obligations have begun feeling overwhelming and you’d like to legally terminate your timeshare contract, you can book a free consultation with our timeshare exit team today!

Frequently asked questions about timeshare rentals

How do I find timeshare rentals as a traveler?

You can look for legit timeshare rental companies. The best way to ensure that these are legit is to look for their Better Business Bureau ratings and reviews online.

What are timeshare rentals?

Timeshare rental is a vacation model that can help both people who have a timeshare and those who want to check out the ammenities of this vacation model without the hassle of ownership.

Is Koala Timeshare rental legit?

Yes, Koala, Red Week, and Airbnb are all legit timeshare rental services. 

How do I report timeshare rental income on my tax return?

You can report timeshare income through the Schedule E (Form 1040).This form is for reporting the gains or loss from real estate or real estate income.

How can I ensure a safe timeshare rental transaction?

To ensure a safe transaction you should:
  1.  Screen the renter and verify their information.
  2. Keep the communication open between all parties involved (owner, renter, resort).
  3. Protect your funds with an escrow service.
  4. Create a rental agreement or notarized contract.