What You Need to Know About Time Shares

They don't make great investments, but a slice of a vacation property may be better than no property at all.

1. Time shares are still a lousy investment. Forget what resort developers tell you. There's a glut of unwanted time shares. Sell today and you can expect to get back only 30% to 50% of what you paid. But on the bright side, buying a previously owned time share could be a bargain because the largest depreciation has already occurred. You'll find listings of resale properties at Timeshare Users Group (www.tug2.net; listings are free to view, but you must pay $15 for the first year of members-only information on local markets).

2. Selling agents may be of little help. You might be tempted to hire a company that promises to sell the time share on your behalf. But consumers have filed many complaints with the Better Business Bureau about companies that charge up-front fees and then fail to sell the properties. Two companies that do not charge an advance fee -- Bidshares.com and Timesharegateway.com -- have good sales records. If reselling your time share is too much of a hassle, consider donating it with the help of the nonprofit Donate for a Cause. If you itemize, you can claim a federal tax deduction of the time share's fair market value (commonly $3,000 to $5,000), and the charity keeps nearly 65% of the proceeds of the time-share sale.

3. Financing is a last resort. The cost of a one-week, two-bedroom time share in high season ranges from $10,000 in St. George, Utah, to $12,000 in Maui, Hawaii. If you can swing it, buy your time share outright. Banks are loath to lend money for time-share purchases, and developers fill the breach with loans charging interest rates as high as 16%. Don't expect a tax write-off for your interest payments, either. These loans are usually unsecured, and interest payments on unsecured loans do not qualify for the home mortgage-interest deduction.

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4. Trading spaces can be a headache. If you want to exchange your week for a week somewhere else, you could join a time-share trading network. For example, Interval International lets you swap with about 2,000 resorts worldwide. Most such programs charge a membership fee of about $100 a year, plus a trading fee of about $150 per trade. Be aware that you may not get into, say, a Maui beachfront resort in January even if you plan a year ahead because such popular resorts are often overbooked. Luckily, trading networks offer an alternative: points that can be redeemed for hotel, cruise and other travel rewards.

5. A slice of a condo can be better than no condo at all. On the positive side, time shares are a convenient vacation option for many families. Condo-apartment time shares are roomier than many hotel rooms, and having a kitchen saves on pricey restaurant bills. What's more, time-share resorts usually offer amenities, such as pools and tennis courts, that can make the average annual maintenance fee of $400 more palatable. Or you can enjoy those resort amenities without the commitment by renting a time share. In general, rental rates are cheaper than paying for comparable hotel accommodations. The largest time-share-rental listings site is RedWeek.com. You're free to browse the listings, but only members can contact owners; the membership fee is $10 for six months.