Posted by Dave T on May 27, 2000 at 22:14:35:
A timeshare is an interval ownership. You “own” the exclusive right to use the property during a specific period of time each year.
I assume that you are not considering buying a timeshare property, but rather converting a property to a vacation rental. What you are describing sounds more like a partnership investment operated as a hotel. As such you should be aware of IRS tax treatment for your property. The IRS will classify your property as business property – not investment real estate. Your depreciation schedule will be 39 years instead of 27.5 years. With a group of investors involved, you will probably need to create a limited partnership to own/manage the property. The general partner will be responsible for filing the partnership tax return and issuing a Schedule K-1 to all limited partners.
If you, instead, purchase and operate the property as you described in your own name, your income and expenses would be reported on Schedule C instead of Schedule E. You may also be subject to self-employment taxes.