How to report timeshare sale on taxes when sold at a loss with 1099-S

You're right that you can't deduct the loss, but you still need to report the sale on your tax return since you received a 1099-S. The IRS gets a copy of that form too, so they'll be expecting to see it on your return. You'll need to report the actual selling price ($1700) as the proceeds on Form 8949 and Schedule D. Your basis is the original purchase price ($19,800) plus any capital improvements you made over the years. Even though you can't benefit from the loss, you should still show the correct numbers to properly account for the transaction. The loss will ultimately be disallowed since it was personal use property. Just make sure you check box C on Form 8949 (property with no capital gain or loss) and include a note that it was a personal use property sold at a loss. This documents everything properly without claiming a deduction you're not entitled to.

Had almost the exact same situation last year with a timeshare in Florida that I couldn't wait to get rid of. After struggling to figure it out, I found this amazing tool called taxr.ai (https://taxr.ai) that literally saved me hours of frustration. I uploaded my 1099-S and it immediately identified it as a personal property sale with a non-deductible loss and gave me step-by-step instructions on how to report it. The software walked me through exactly what forms I needed and how to properly document the sale. It explained that I still needed to report the transaction even though it had no impact on my total tax - something I wouldn't have known otherwise. It even caught that I needed to include my timeshare maintenance fees in my basis calculation!

I was skeptical about taxr.ai at first (as you can see from my comment above), but I decided to try it with my complicated tax situation this year. I had sold both a timeshare and some investment property, and wasn't sure how to handle the different treatment. Wow, I'm glad I gave it a shot! The system immediately recognized that my timeshare sale was a personal use loss (not deductible) while my other property sale was an investment property (fully reportable with gain/loss implications). It walked me through exactly how to report each one differently on my tax forms. The step-by-step guidance was actually clearer than what my accountant told me last year, and I ended up learning quite a bit about how property sales are treated differently depending on their classification. Definitely worth checking out if you have any unusual tax situations!

If you're struggling to deal with this 1099-S situation, you might want to call the IRS directly to get their official guidance. BUT - good luck with that! I spent 4+ hours on hold last week trying to ask a simple question about my tax forms. Then I found this service called Claimyr (https://claimyr.com) that got me connected to an actual IRS agent in under 15 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c. Basically they use some technology to navigate the IRS phone system and hold your place in line, then call you when an agent picks up. I used it to confirm exactly how to report my wife's timeshare sale (similar situation to yours) and the agent walked me through the exact forms and boxes to fill out. Saved me hours of research and second-guessing myself.

I take back what I said about Claimyr being BS. After commenting above, I decided to try it myself since I've been trying to reach the IRS for 3 weeks about an issue with my tax transcript. I was COMPLETELY wrong. The service actually worked exactly as described. I signed up, entered my number, and about 25 minutes later my phone rang - with an actual IRS representative on the line! No navigating phone menus, no waiting on hold, nothing. Just straight to a helpful person who resolved my issue in about 10 minutes. I specifically asked about reporting a timeshare sale with a loss (like OP's situation) and the agent confirmed everything that people have said here - you must report it on Form 8949 with the correct proceeds and basis, but the loss isn't deductible. Having an actual IRS employee confirm this gave me total confidence about how to file.

Can I just point out that timeshares are literally the worst investment ever created? I lost almost $25k getting rid of mine last year. Biggest financial mistake of my life!

Just to be super clear about this situation: You HAVE to report the sale because the IRS received the 1099-S. However, since the loss is a personal loss (not business or investment), you cannot deduct it. On Form 8949, you'll enter: - Description: "Timeshare at [location]" - Date Acquired: when you bought it - Date Sold: when you sold it - Proceeds: $1,700 (from 1099-S) - Cost Basis: $19,800 (your purchase price) - Code: "L" for non-deductible loss - Adjustment: the amount needed to make the loss zero The form will calculate your loss ($19,800 - $1,700 = $18,100), but then you'll add an adjustment of $18,100 with code "L" which brings the net gain/loss to $0.

I went through this exact same nightmare with my timeshare in Vegas two years ago. Lost about $16k on the sale but had to report it anyway because of the 1099-S. One thing that helped me was keeping a detailed record of ALL the fees I paid over the years - maintenance fees, special assessments, transfer fees, etc. While you can't add ongoing maintenance to your basis, any one-time fees you paid at purchase (like deed preparation, recording fees, or initial setup costs) can be added to your $19,800 basis. Every dollar helps when you're documenting the transaction. Also, if you used a real estate agent or paid any selling costs (listing fees, advertising, etc.), those reduce your proceeds rather than increase your basis. So if you paid $300 in selling costs, your net proceeds would be $1,400 instead of $1,700. Small difference but worth getting right. The whole thing is frustrating but at least once you file this year, you're completely done with that financial disaster forever!

I'm dealing with a similar situation right now - sold my timeshare for a fraction of what I paid and just received the 1099-S. It's frustrating that we have to do all this paperwork when there's no tax benefit, but I appreciate everyone explaining the process clearly. One question I have: if I made some improvements to the timeshare over the years (like upgraded furnishings or paid for unit renovations), can those be added to my basis? Or are those considered personal expenses that don't count? I'm trying to figure out if there's any way to increase my basis beyond the original purchase price to at least minimize the loss on paper, even though I know I can't deduct it. Also, has anyone had experience with the IRS questioning the large difference between basis and proceeds? I'm worried about triggering any red flags with such a dramatic loss amount.

I went through this exact situation two years ago with a timeshare in Orlando that I sold for $2,100 after originally paying $23,000. The whole process was incredibly frustrating, but I learned a few things that might help you. First, yes, you absolutely have to report it even though you can't deduct the loss. The IRS computer systems will automatically match your SSN to that 1099-S, so leaving it off your return will definitely trigger a notice. Second, don't forget to include ALL your original costs in your basis calculation. Beyond the $19,800 purchase price, look for things like closing costs, deed preparation fees, recording fees, and any other one-time costs from when you bought it. I found an extra $800 in fees I had forgotten about, which at least made the documented loss slightly smaller. The paperwork isn't too bad once you get started. Form 8949 has clear instructions, and TurboTax (or whatever software you use) will walk you through it step by step. The key is just making sure you report the correct numbers and properly indicate that it's a non-deductible personal loss. One silver lining: once you file this return, you're completely done with that timeshare forever - financially, legally, and tax-wise. That peace of mind was almost worth the loss for me!

I'm in a similar boat with a timeshare I'm trying to get rid of. Reading through all these responses has been incredibly helpful - I had no idea that you still have to report the sale even when there's no tax benefit from the loss. The step-by-step breakdown from @Aiden Chen about using code "L" and the adjustment calculation is exactly what I needed to understand. It's frustrating that we have to jump through all these hoops for what amounts to no change in our tax liability, but at least now I know the proper way to handle it. One thing I'm curious about - has anyone here tried to negotiate with the timeshare company to buy back their unit before going through the hassle of finding an outside buyer? I've heard some companies will do buybacks at very low prices just to avoid dealing with abandoned properties, but I'm not sure if that's real or just wishful thinking. Either way, thanks everyone for sharing your experiences. It's oddly comforting to know I'm not alone in this timeshare nightmare!

I'm dealing with a very similar situation right now - sold my timeshare for $2,300 after paying $21,500 originally. Just got my 1099-S and was hoping I could somehow use that massive loss on my taxes, but clearly that's not happening! Reading through all these responses has been incredibly educational. I had no idea about the Form 8949 requirements or the code "L" adjustment process. The fact that we still have to report it even though there's no tax benefit seems like bureaucratic overkill, but I definitely don't want to mess around with IRS matching systems. One thing I'm wondering about - for those of you who have been through this process, how long did it take to actually complete the sale once you decided to get rid of your timeshare? I've been trying to sell mine for months and the whole resale market seems pretty brutal. Did anyone find certain companies or methods that worked better than others? Also, has anyone had their tax software automatically handle the adjustment calculation, or did you have to manually figure out the code "L" part? I'm using FreeTaxUSA this year and hoping it can walk me through the process without too much confusion. Thanks everyone for sharing your experiences - it's strangely reassuring to know so many other people have survived this same financial nightmare!