If you use the time share for your own personal use, then the loss is not deductible. It's treated like a second residence. You cannot deduct losses on personal residences (whether first or second). A parallel would be your car. Except under unusual circumstances you probably never sold a car at a profit, and I bet you didn't deduct it either. On the other hand if you bought the time share as an investment, rented it out etc, then you could deduct the loss, but you would have depreciated it too and you would have to recoup the depreciation which would reduce the allowable loss.

Joe Varga