Rental income for timeshare

[Possi]

My client came in new 2 years ago. She had timeshare income, say $700 and expenses of $550. The accountant before me put rental income on L21 and took expenses as an adjustment to income. I researched it because I didn't think that was right.

https://www.redweek.com/resources/articles/tax-aspects-renting-timeshare

I put the income and expenses on Sch E.

This year, there is an assessment and it is suggested in the condo letter that it can be depreciated.

This income is very inconsequential. Certainly not enough to stop everything going on here with 60 returns in the hole.

But, my question is this; if she sells this, will there be depreciation recapture that I never took? I believe it is treated as personal property so depreciation is not a factor.

[Pacun]

I think you have to consider if the place was rented for less than 14 days.

[Possi]

5 minutes ago, Pacun said:

I think you have to consider if the place was rented for less than 14 days.

Yes, but she didn't use it at all for personal use.

[Possi]

Oh hold the phone.... this isn't a timeshare at all. She OWNS a condo. The CONDO group leases one of the condos to a worker. Everybody in the building gets a small piece of the pie. There isn't anything to depreciate, as she isn't exactly renting her own place at all. In all my years, I have never...Seems like this condo association is getting away with NOT filing a partnership! Instead, the send this letter to everyone saying they have to claim the rental income and "here are your expenses associated with it."

Thanks, Pacun~

[Abby Normal]

The condo association owns that one unit? Look up the real estate records on that unit to see how it's titled. If she has no ownership interest in that unit, I would consider any money received as a refund of condo fees.

The homeowners association is probably trying to avoid taxes on the rental income by zeroing it out by giving it back to the other unit owners. I don't think that works.

[Possi]

1 hour ago, Abby Normal said:

The condo association owns that one unit? Look up the real estate records on that unit to see how it's titled. If she has no ownership interest in that unit, I would consider any money received as a refund of condo fees.

The homeowners association is probably trying to avoid taxes on the rental income by zeroing it out by giving it back to the other unit owners. I don't think that works.

Agree~ thanks!

[Possi]

On ‎4‎/‎3‎/‎2017 at 4:01 PM, Abby Normal said:

The condo association owns that one unit? Look up the real estate records on that unit to see how it's titled. If she has no ownership interest in that unit, I would consider any money received as a refund of condo fees.

The homeowners association is probably trying to avoid taxes on the rental income by zeroing it out by giving it back to the other unit owners. I don't think that works.

I pressed my client, and here was his response... you nailed it...

"Oceans has rental income from various things like offices, cabanas, and the rooms on the Club Level.  I'm not sure why they give us those statements every year but I guess it's because the money goes to reduce our condo fees.  But how they figure the amount as income I do not know.  We are not actually handed any money."