Timeshares should be transparent to get tax break
Maxwell: Industry has come clean about the depreciating value of some products, so they should disclose the awful resale value.
Timeshare critics have long argued that many units are grossly overpriced — worth only a fraction of what a buyer could ever hope to recoup if she or he later wants to sell.
One day, a pitchman is trying to pressure you into spending $20,000 for a unit you can use a week or two a year. The next, you learn that previous buyers are unloading the same units — and the costly annual fees — for pennies on the dollar.
Well, it looks like the timeshare industry is finally coming clean about the depreciating value of some of its products — not because it wants to be transparent, but because the industry wants a tax break.
Instead of being taxed on units that a developer claims are worth $20,000, for example, timeshare lobbyists want a new law allowing them to be taxed on the lower, cruddier values for which people unload them … like, say $500.
I can get behind this idea — under one condition:
Timeshare sellers must also disclose those cruddy, resale prices to every prospective buyer.
Sure, you can tell me your units are worth $20,000. But you also have to disclose that the last 10 or 20 private sellers in your complex were so desperate to get out of their contracts, they sold for only $2,000.
Or $500.
Or $1.
Yes, $1. Take a few minutes to peruse Ebay’s listing of timeshare resales. There, you’ll find plenty of “gorgeous property” available for as little as $1.
The hitch, of course, is that the buyer must also pay for things like annual “maintenance fees” of $1,725.23. (Which seems like an awful lot of maintenance to pay for on a unit you’re only using a week or two a year.)
Now, the timeshare industry normally doesn’t like to talk about these give-away resale prices. The American Resort Development Association even published a piece titled “The Myth of the $1 Timeshare,” suggesting that very few timeshares resell for so little.
Then I have wonderful news for you, timeshare industry! If you take my suggestion — and agree to disclose how much your properties actually fetched on the re-sale market — there won’t be any more misinformation. Everyone will see precisely what your product is worth.
I’d argue you should be disclosing that anyway.
So does Lisa Ann Schreier. a timeshare blogger and consultant based in Clermont who has long fought for better transparency in the industry.
“I think you are correct,” she said Wednesday. “If developers want to take advantage of the
lower tax base, then they should be obligated to disclose the resale prices as well as any and all usage restrictions that they place on the resales.”
Schreier likes a lot about timeshares. So do many owners. And some companies, including Disney, typically earn good reviews on transparency.
But the industry in general has a deserved reputation for caring more about high-pressure sales than customer satisfaction. Sales people sometimes insist customers strike deals on the spot without leaving the premises to conduct any due diligence. It’s ridiculous. I spent more time this week researching the purchase of a pickleball paddle. (Yes, I’m that hip.)
Meanwhile, the timeshare industry just wants to pay less in taxes — as much as $170 million less statewide if this passes, as the Sentinel’s Caroline Glenn reported. And whenever industry lobbyists are looking for a tax break, Florida legislators are usually happy to oblige.
The tax cut bill is sponsored by a trio of Republicans — Rep. Randy Fine of Brevard County, Rep. Sam Killebrew of Polk and Sen. Joe Gruters of Sarasota. But the three guys haven’t
found universal support within their party. During the bill’s first stop in the Senate’s Regulated Industries committee this week, Tampa Bay Republican Ed Hooper opposed the bill, saying it just sounded like a way for timeshare companies to get around court rulings forcing them to pay their fair share in taxes.
The bill might’ve gone belly-up right there, except South Florida Democrat Lauren Book came to the timeshare industry’s rescue, giving the bill a 4-3 approval. Orlando Democrat Linda Stewart voted no.
The bill is a bit a of a mess (as many Florida bills are). It says timeshare owners can lower their tax bills by filing an appeal and citing an “adequate” or “reasonable” number of resales … without ever defining “adequate” or “reasonable.” Good bills don’t have undefined criteria.
We’ve seen bad timeshare bills before. A few years ago, I wrote about one that made it tougher for buyers to get out of faulty contracts — even if the timeshare seller was the one who screwed up the contract. The bill made no consumer sense … so of course the Legislature passed it.
Gov. Rick Scott signed the bill into law and later appointed the bill’s sponsor — former Rep. Eric Eisnaugle, a lawyer with no judicial experience — as one of the state’s appellate judges. Happy endings for everyone! (Well, except those buyers locked into flawed contracts.)
Listen, in the grand scheme of timeshare bills, this one isn’t all that bad — as long as it’s completely transparent. That must be added.
The industry seems to be openly admitting that many of its units aren’t worth anything close to what they’re telling new buyers. And as long as they’re candid about that with consumers — and not just when they’re trying to shave their tax bills — that seems like a fair trade.