Are Timeshares an Asset or Liability?

The statement “timeshare owner” gets thrown around quite a bit. The truth of the matter, however, is that timeshare owners really do not own anything. A timeshare contract is nothing more than a debt liability.

So the question becomes, why are timeshare debt liabilities ever viewed by consumers to be assets? The short answer is in the sales pitch. The value proposition, that is part and parcel of the timeshare sales pitch, preys on the consumer not understanding the true meaning of an asset and a liability.

The timeshare sales pitch makes the consumer feel like the deal is too good to pass up. Or, that it is an investment opportunity. Or, at the very least a way to take exclusive vacations at rock bottom prices.

It is important for consumers to fully understand what they are buying, from a legal and financial perspective, when they sign on the dotted line of a timeshare contract. What is it that the timeshare owner really “owns”? And how will the timeshare contract impact other areas of one’s personal balance sheet?

When speaking in terms of a personal balance sheet, an asset can be defined as liquid or near liquid assets, meaning cash or things that can be converted to cash quickly (i.e. stocks, bonds, precious metals, etc.).

Real estate can also be defined as an asset, albeit not nearly as liquid. Real estate usually over time appreciates in value and can be sold for cash. Do not confuse owning real estate with that of a timeshare though. Timeshares are the dictionary definition of illiquid, as they cannot be converted into cash.

The truth of the matter is your timeshare is a liability. The taxes and maintenance fees are actually added to the debt side of your balance sheet, thus increasing your debt ratio.

If you were tricked into believing your timeshare was an asset, or if you were sold on the concept of it being an “investment opportunity”, you do have rights and options you may not be aware of.

If you would like to speak to a timeshare specialist now, call the Timeshare Freedom Group at (866) 668-6872.

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