Costs of owning a timeshare

So, lets get down to some numbers, shall we? How much will a timeshare actually cost you? Remember, it is not only the upfront payment, and the annual fee that you should consider. There are other ‘hidden’ costs that you should keep in mind before deciding whether you want to buy a timeshare, think about a vacation rental every time you visit, or may be buy real estate in your favorite destination and use it like a second home.


So, in general, here would be your cost considerations:

1. Purchase price – amount you pay upfront to the resort or developer

2. Annual maintenance fee – the amount charged by the developer every year for maintaining your property

3. Income lost - this is basically the income you might lose if you had used your money for something other than buying the timeshare. This is termed as opportunity cost. For example, if you had put the money in a CD in the bank, you would probably make an average of 2% on it. Or if you decided to invest it in your 401K or IRA, your return on an average would probably be approximately 8% with a cumulative effect over a few years. Consider after tax effects of any other investments you might consider.

4. Exchange costs – if you decide to exchange or trade your timeshare week with another destination during the year

5. Consider any qualitative losses, i.e. are you cutting corners and not buying a car that you desperately need, because you’re planning to buy a timeshare. Remember, in some cases, big expense items, like cars, household items expenses, are deductible for your tax returns. Based on your lifestyle and vacation style, also, consider things like greater flexibility of rentals.

6. Additional expenses - You could be taking a vacation just because you own a timeshare, which otherwise you might defer. Airfare, food, are additional expenses.

7. Legal and paperwork costs, if you decide to hire a real estate agent or attorney.


OK, enough words- gets let down to the nitty-gritty. Here are the timeshare evaluation steps demonstrated, with an example. Please remember, this is purely a hypothetical example and there could be several other considerations in your specific situation.

1. Purchase price of $15,000

2. Annual fees of $1000

3. Income lost of $320.

• Say if you were not buying a timeshare, you would put aside the money in your bank account as a CD, which earns an average of 2%, depending on the economy. This will be a total of approximately $320 ($16,000*2%) for one year, and a lot more when it compounds in the next few years. For simplicity, lets just consider the annual simple interest.

4. Exchange company membership at $120 per year or every other year.

• If your exchange is in popular destinations or international locations, its even more.

5. Lets say you don’t incur the above expenses mentioned in points 5,6,7- best case scenario.

So, now if you total all of the annual expenses only: $1000(fee) + $320 (lost income) +$120 (exchange fee) = total of $1,440

Using this calculation, you would compare the $1,440 estimated total annual cost with the cost of renting a hotel or a vacation home in the area or in the same resort, as well as other destinations where you would like to vacation. You make your choice!