Curious and interested - Why would one want to involve a timeshare property under a 1031 exchange?
On the exchange side - Usually, timeshare properties diminish in value so it would not be to defer a gain on the sale of a timeshare.
I guess one could want to defer a gain on a non-timeshare property sale by exchanging (sinking it) into a timeshare. This makes no sense as timeshares values only go down from the purchase. Most of us would just like to recover our original investment in the timeshare. As aggressive as they are, I've never heard a sales person say a party could recover the initial timeshare investment.
Please share your thoughts.
You wouldn't do a 1031 for a timeshare for the same reasons as a 1031 on rental property. You're right. No tax deferral or savings. The typical 1031 for rental property is a sale - property for cash. This timeshare exchange would be property for property.
If your host timeshare company has "a first right of refusal" on the timeshare sale, the 1031 may be the best mechanism to prevent them from exercising that right. They would have to satisfy both parties, since both parties are relinquishing a property. They are unlikely to do that, since the Timeshare company would gain nothing.
The 1031 would simply allow two parties to exchange their timeshares. Not an option for anyone just trying to sell their timeshare.
