Q: I purchased a time share a few years back and was told if I travelled to tour a property to determine whether or not I wished to purchase it, my travel expenses would be tax deductible. Any truth to this or was it just a selling point?
A: The answer can be found in IRS Publication 463 (Travel, etc. Expenses), and Publication 529 (Miscellaneous Itemized Deductions), and it's somewhat of a gray area.
On the one hand, you can deduct business expenses connected with earning income. Until the property is actually purchased, though, I would put this under the category of an amortizable start-up expense. Under these rules, you defer the ability to deduct until income is actually earned. Then, you can deduct up to $5,000 of start-up expenditures (phases out between $50,000 and $55,000), with the remainder amortized over 180 months. Since the business activity in question would be a rental property, the expenses would go on Schedule E.
A conservative approach, though, would latch onto the disallowance of a deduction for travel expenses to investment seminars, which is found in Pub. 529.
It goes without saying that expenses connected with buying a timeshare for personal purposes only are completely-disallowed.
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