Timeshare Law in Florida Helps Timeshare Owners & Developers

Earlier this month, the state government of Florida passed bill HB 61 that codifies two tax laws related to timeshares and one financial instrument that can alleviate fears for prospective timeshare owners.

We reported on the HB 61 bill back in April when it was approved by the state House and pending passage by the state Senate.  But here’s a recap to the major points of the now law:

- Timeshare exchanges are not eligible for tax.  Although no state or local government has taxed timeshare exchanges, the clarification was lobbied for by the American Resort Development Association (ARDA) in order to head off any attempt to use timeshare exchanges as sources of tax revenue in this wounded economy.

“Without the consistent and strong support from sponsors, Sen. Mike Haridopolos (R-Melbourne), and Rep. Steve Precourt (R-Winter Garden), HB 61 could not have been enacted,” said Jason Gamel, Vice President of State Government Affairs of ARDA. “This ARDA-backed measure clarified the existing tax status of exchange which had been questioned by some jurisdictions as they searched for revenue in a down economy.”

- The law does set in writing the practice of charging hotel-like taxes on transient use of timeshares.  This means that timeshare rentals must be taxed like hotel rooms.  Taxes on transient timeshare use are already charged in the industry.  So no abrupt change occurs due to this part of the law.

- Lastly, the law gives the timeshare industry access to “debt-cancellation” policies that allow timeshare owners to give back their timeshare in the event of loss of income/loss of job.

Taxing Timeshare Rentals, Exemptions and You

Legislation in Florida is currently being worked on that would give timeshare resorts certain exemptions from bed taxes when providing promotional deals to invite guests visit their resorts.  Bed taxes are taxes placed on tourists who rent accommodations.  These types of taxes are great for local governments as they generate revenue without increasing taxes on residents.  (This is very favorable to local politicians for this reason.)

The legislation would require timeshares to pay bed taxes when they rent units like hotels.  However, the resorts would not be required to pay these taxes when units are offered as “stay-over” packages or for exchanges which have grown in popularity over the years.

This is great for the resorts and for the local governments.  The taxes will bring in more revenue for cities and counties where the timeshares exist.  Although the timeshare companies will now have to pay taxes on rentals, they secured key exemptions allowing them to continue vital programs to bring potential buyers onto their properties.

So, the government got what they wanted – taxes; the resorts got what they wanted – exemptions to keep the flow of buyers coming; yet, does the individual timeshare owner benefit?  Not really.  Now, owners will be responsible for taxes when renting their units.  This extra “task” may increase incentive NOT to rent out their units, giving the resort that much more of an advantage to control the rentals of their units.

Owners need to take a stand and be heard.
For more, click here

Why Timeshares Are Bad ‘Investments’

Please keep in mind that timeshares should NEVER be considered as investments.  The reason for the title of the blog post is to give credit to the article of which this post is based on: http://www.nuwireinvestor.com/article.aspx?id=227

Here’s a quick outline of the article…

1. Time Value of Money
The money that you pay upfront could have gone to use elsewhere now instead of paying for future vacations you may or may not take.

2. Maintenance Fees
You pay every year for your timeshare regardless if you go or not.  Maintenance fees typically go up every year.

3. Depreciating Asset
Timeshares are worse than cars.  The second that you purchase a timeshare, it loses 40 to 75 percent of its value.  There are certainly areas where the resale value can go to zero.

4. Rental Rates are Lower Than You Think
The flood of timeshares for sale creates a large rental market that forces down rental rates.  Also, developers offer incredible incentives to renters in order to entice them to the resort as potential buyers.  They pass none of the proceeds to owners.

5. Exchanges
Timeshare exchange companies require fees to be part of their program.  Over time, your timeshare loses its “newness” factor and the value of your exchange decreases.