Should You Invest in a Timeshare?

Changes in the industry are adding more flexibility, but timeshares come with big financial risks.

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Donating one year of your timeshare to charity is another option, if you don't want to feel like your timeshare is a complete waste. Donateforacause.org lists charities throughout the country that are seeking timeshare donations, but you'll still have to pay the annual maintenance fee for the unit. And don't expect a tax deduction for your donation. "The IRS has ruled that there is no value for the time used," says Ilyce Glink, a real estate expert based in Chicago.

Pro/con: You can trade in your timeshare and travel. Belleghem used RCI.com for several years to trade her timeshare at Welk Resorts in Escondido, Calif., for units in places such as Montana, Portugal, Spain, and Paris, among others. The drawback is that the website charges $124 in annual network dues and subscription fees, as well as a fee for each transaction, ranging anywhere from $39 to $337, depending on the length of stay, unit size, and time of purchase.

Con: It's a long-term financial commitment. Most timeshares are perennial, meaning they don't have an expiration date. That means you're obligated to pay the annual maintenance fee indefinitely. "That's a pretty big financial obligation," says Ric Edelman, a financial adviser, author, and radio host based in Fairfax, Va., who cautions his clients against investing in timeshares.

There is also the possibility that your finances could take a hit. "If you lose your job, now you've got to make annual payments on the timeshare on top of being unemployed," Glink says.

Pro/con: You're guaranteed a vacation each year. Purchasing a timeshare locks in a vacationing lifestyle, says Ed Kinney of Marriott Vacations Worldwide. "Our industry accommodates people who like to plan ahead and look forward to a trip each year," he says. "People might want to go skiing over the holidays each year, and they can do that without worrying about whether they'll get in year to year."

However, your desire to return to the same location at the same time each year could wane. If that's a concern, ARDA's Nusbaum says purchasing a timeshare that operates on the points system would offer you more flexibility with how and when you decide to use the vacation.

So, is a timeshare right for you? There's no easy answer, given the range of offerings for timeshares today, but now you can make a well-informed decision.