Skip to main content


Timeshares are a special form of real estate ownership for vacation homes.

What are timeshares?

FNB Timeshares
Timeshares are a special form of real estate ownership for vacation homes. If you've been on vacation lately, chances are you've been approached by someone trying to get you to participate in a sales presentation on timeshares. You may have even been offered a gift as an extra incentive. Although timeshares are certainly a popular vacation option, they can pose problems. So, it's important to understand how timeshares work before you purchase one.

Types of timeshare ownership

For the most part, there are two types of timeshare ownership: a deeded plan and a non-deeded plan.

Deeded plan

In a deeded timeshare plan, you purchase a fractional ownership interest in a specific unit. You can rent, sell, donate, or bequeath your ownership interest just as you would any other real estate that you own. Ownership of a deeded timeshare can be structured in one of two ways: a fixed week or a floating week arrangement. In a fixed week arrangement, each owner receives a deed to the timeshare for a specific week(s). In a floating week arrangement, each owner receives a deed to use the timeshare for a week during a particular time period. However, the owner must then call the resort each year to make a reservation for the specific week that he or she wants to use the timeshare.

Non-deeded plan

In a non-deeded timeshare plan (also known as right-to-use ownership), ownership remains with the original property owner/developer. You purchase a lease, license, or club membership that gives you the right to use the property for a specific time each year for a limited number of years. Once the lease expires, the right to use reverts to the property owner/developer.

As with any real estate purchase, you should seek legal advice before signing a timeshare contract.

Other types of timeshare programs

Vacation exchange programs

Many timeshare developments belong to timeshare exchange programs. These programs give you the ability to trade your timeshare week(s) with another timeshare owner. Most timeshare companies offer in-house exchange programs, as well as the ability to exchange your timeshare for another anywhere in the world at the same, one-time fixed price.

Many exchange programs charge some type of fee to list your timeshare for exchange. The first year of membership is generally included in the purchase price. After that, there is an annual fee, as well as fees for each exchange.

Point programs

Some timeshare companies place a point value on each timeshare unit. Under the point system, you receive vacation credits that are redeemable for a varying number of accommodations, depending on the season, day of the week, size of the unit, and resort location. You may also be able to use your points toward the purchase of another timeshare.

Vacation clubs

Vacation clubs own multiple timeshare properties in different locations. After paying a fee and annual club dues, members can reserve timeshares at the various properties owned by the club.

How much does it cost?

The cost of purchasing a traditional second or vacation home is out of reach for many consumers. Timeshares can give you the ability to have such a home, since you are only purchasing a fractional interest. Prices depend on many factors, such as the season and the timeshare's location.

In addition to the cost of purchasing the timeshare, you must pay an annual maintenance/management fee. This fee must be paid every year, regardless of whether you use your timeshare, exchange it for another, or don't use it at all in a given year.

Timeshare prices in the resale market tend to be lower than the price charged by developers for new units. You may benefit greatly by shopping in the resale market before you buy.

Tax consequences of owning a timeshare

Generally, the interest that you pay on a deeded timeshare loan is tax deductible on your income tax return as interest on a second home. Your share of property taxes is also deductible. However, if you rent out your timeshare, you'll need to follow special tax rules for second/vacation homes.

The interest that you pay on a non-deeded (or right-to-use) timeshare loan is not deductible. However, if you used a home equity loan to finance the purchase, the interest may be deductible.

Purchasing a timeshare

You can usually find timeshare sales representatives in most vacation destinations with a high tourist population. Or you may be contacted by a timeshare development through direct mail. After listening to a sales presentation and taking a tour of the facility, you'll be asked if you're interested in purchasing a timeshare. Most timeshare developers will finance the purchase of their timeshare units. However, these loans often have higher interest rates and shorter terms than conventional mortgages. Some lenders will also finance the purchase of a timeshare unit.

Before you sign on the dotted line, consider the following:

  • Make sure that you have read all of the sale documents carefully and understand exactly what you're getting--deeded or non-deeded plan, fixed or floating week arrangement, etc. It's a good idea to take them to an attorney for review.
  • Is there a "cooling off" period during which you can cancel the contract and get your money back?
  • Is the timeshare development a member of any trade organization, such as the American Resort Development Association?
  • Is the resort managed properly? Are the facilities well maintained and kept up-to-date?
  • If you are primarily interested in the exchange benefit of a timeshare, make sure that you are purchasing a timeshare in a popular season (after all, not many people want to go to a ski resort in the middle of July). In addition, you'll want to make sure that the resort is affiliated with an exchange company.
  • Don't be forced into purchasing a timeshare as a result of high-pressure sales tactics. Just because you listened to a sales presentation and received a free gift doesn't mean that you are obligated to purchase something.
  • Remember that a timeshare should not be viewed as an investment. So, you shouldn't expect a return.

If you need more information on purchasing a timeshare, contact the real estate commission or office of consumer protection in the state where the timeshare is located.

Keep in mind that if you purchase a timeshare in a foreign country, U.S. federal or state property laws generally won't protect you.

Notices & Disclosures

Broadridge Investor Communication Solutions, Inc. does not provide investment, tax, legal, or retirement advice or recommendations. The information presented here is not specific to any individual's personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances. These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable — we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2023

First National Bank does not warrant the adequacy, accuracy or completeness of the Broadridge Investor Communication Solutions information or descriptions provided here.

0 items in your cart

Cart Proceed to Checkout

Product video