It might be happening.....

[captainkidd]

We've been here before, I know, but I'm close. There's a contract through resale at Boardwalk for 350 points. We stay for 11 nights in July, and for a 1 bedroom standard view in July, the total points is....you guessed it, 350.

I'm negotiating with the seller about the 1st years dues. It's about $1,900, and since we're not going until July, I don't want to pay those. It would give me about a year of no dues to make payments on the loan. If I play my cards right, I could have the loan paid off in about 2.5 years.

My biggest concern with DVC has always been "What if?" As in what if we lose a job, can't go, etc.? But I did some thinking, and realized, look how many people sell their points every year. If I can get this paid off quickly, and all I have to worry about our the dues, if heaven forbid something happens, rent the points out and my maintenance is covered for the year.

We'll see what happens. Wish me luck....

 

[luv]

Luck.

 

[sweetpee_1993]

Good luck! You definitely haven't been impulsive or bought in when you were in one of those "Pixie Dust" moments. That in itself is a very good thing!

 

[wannab@dis]

Interesting. But good luck.

 

[WWWD]

Hope it works out for you. The EPCOT area DVC's are great - location, location, location. You can always rent out your points at the Boardwalk, especially during the Food and Wine fest as the 11 month window really makes a difference then.

 

[ishmael0316]

Best of luck to you Captain! Can't wait to see how it works out for you. It might motivate me to grab up a place myself.

 

[alawrence]

I hope for one that it works out for you. You have been back and forth, we all know.

It will just be nice to have you swinging for the fences on the DVC owners side of the plate from now on.

 

[GoofGoof]

Good luck. Welcome to the dark side

 

[woody98]

U won't regret it

 

[captainkidd]

So ignoring Hakuna's spiteful attempts at trying to be funny, the offer I made the seller has been accepted. Can't do anything until Monday, which is a good thing. It gives us time to sit down with our CPA and go over the contract, how it will affect our tax situation and all that good stuff.

 

[MichWolv]

So ignoring Hakuna's spiteful attempts at trying to be funny, the offer I made the seller has been accepted. Can't do anything until Monday, which is a good thing. It gives us time to sit down with our CPA and go over the contract, how it will affect our tax situation and all that good stuff.

Tax situation? i would be interested in reading how that is impacted.

And I suspect that Hakuna's comments are rooted in the fact that you not so recently declared your intent not to return to WDW after the trips you had already planned.

 

[captainkidd]

Tax situation? i would be interested in reading how that is impacted.

And I suspect that Hakuna's comments are rooted in the fact that you not so recently declared your intent not to return to WDW after the trips you had already planned.

I never said I would not go back. I said I would be taking a year off to go to Disneyland. .

 

[WWWD]

Unless you're talking about the money used to buy DVC, the tax implications of owning DVC will be minimal. The sales contract should be pretty standard if going through re-sale sites such as DCV store or DVC Timeshare. If seller is listing and writing contract, then skip CPA and see JD.

 

[MichWolv]

I never said I would not go back. I said I would be taking a year off to go to Disneyland. Hakuna's comments are rooted in something I will never understand for the life of me - The disdain for strangers on a message board.

Nonetheless, i'm still interested in how buying a timeshare affects your tax situation.

 

[flynnibus]

Nonetheless, i'm still interested in how buying a timeshare affects your tax situation.

How you finance it.. if they can deduct property taxes (if broken out per unit, per week).. if they can claim it as a vacation home, etc. I've never looked at the details of how DVC breaks things out per unit in their fees.. but from my understanding there are areas where you MAY have an impact, but I think most do not. One would also consider how rental income would be handled, etc.

 

[Brutus Buckeye]

Nonetheless, i'm still interested in how buying a timeshare affects your tax situation.

Depending on which state he lives in, there may be a tax on assets or property in addition to the main residence. Also, purchasing the vacation club membership at a gain could cause tax issues because one might be able to afford the loan on purchase but no the tax on the realized gain. Additional to these, I am sure there are numerous other tax situations that could arise. The Internal Revenue Code is a beast of law and no one including the IRS understands it.

 

[MichWolv]

Depending on which state he lives in, there may be a tax on assets or property in addition to the main residence. Also, purchasing the vacation club membership at a gain could cause tax issues because one might be able to afford the loan on purchase but no the tax on the realized gain. Additional to these, I am sure there are numerous other tax situations that could arise. The Internal Revenue Code is a beast of law and no one including the IRS understands it.

And Disney brings together a Buckeye and a Wolverine.

The internal revenue code is a beast of many many laws (although not nearly as complex on most personal matters as many believe). Nonetheless, it does not address state property taxes, and I have never heard of a gain on purchase of real estate, as such gain would not be realized until sale.

The deduction of mortgage interest and property taxes is likely. The amounts just seem to me like they would pale in comparison to similar amounts on a home. Rental income I had not considered, however.

How you finance it.. if they can deduct property taxes (if broken out per unit, per week).. if they can claim it as a vacation home, etc. I've never looked at the details of how DVC breaks things out per unit in their fees.. but from my understanding there are areas where you MAY have an impact, but I think most do not. One would also consider how rental income would be handled, etc.

 

[captainkidd]

To be honest, I really don't know. From the research I've done, DVC loans are like a mortgage in some way, so it can be claimed on your tax returns. Not sure how much of an impact it would have (if any). That's why I'd like to talk to my CPA first.

 

[GoofGoof]

I am a CPA, but it has been a while since I cranked out 1040s (besides my own). Its a very smart move to talk to your own guy since he knows your situation and any state tax issues. For conversation sake, here is what I remeber. Interest on your timeshare loan should be deductible as long as you only own 1 property currently. You can deduct mortgage interest on your primary residence and 1 additional property. If you already own a vacation home then you would have to choose between the vacation home loan and the timeshare loan. Another requirement is that the loan is secured by the timeshare (you can't charge the purchase on a credit card or take out a personal loan to pay for it and then deduct the interest). There is a very small piece of the maintenance fees that relates to property tax that is also deductible on schedule A. The rest of the fees are not. Since it's not your primary residence you would have to pay taxes on any gain if you sell in the future. Since the prices probably won't go up you are safe from that. Unfortunately, losses from the sale are not deductible.

If you decide to rent out the points technically you should be paying taxes on rental income. I seriously doubt anyone actually does unless they are renting points as a business. If you did decide to rent your points and pay taxes you would probably use schedule E of the 1040 (you could use schedule C too if you were renting points as a business) and you could deduct your annual fees as an expense against the rental income. You would also deduct your mortgage interest from the timeshare loan on schedule E instead of schedule A. You could also depreciate the original purchase price and take a portion each year as an expense against the rental income. Depreciating the rental property will lower your basis in the property which means if you sell you would compare the sales proceeds vs your adjusted basis (what you paid less depreciation taken). This could result in a capital gain even if you sell for less than the purchase price. Off the record, I would just skip it. If you rent points it's a private contract between 2 parties so there is no way the IRS would know. Here is the IRS document on mortgage deductions. Page 4 talks about timeshare loans being eligible.

http://www.irs.gov/pub/irs-pdf/p936.pdf

 

[captainkidd]

After a completely sleepless night, I have decided against making the purchase. Not sure if anyone is interested in the reasons, but for those that are, here is why I am going to pass.

-I can not buy the contract without having to finance it at this time. I've worked very hard to get my wife and I completely debt free, and the idea of taking on a 5 year loan just seemed to risky with our economy in its current state. I decided, I am going to try and save the money for about 18 months and look into a resale contract at that time, that I wouldn't have to finance any of.

-I love the Boardwalk, but the contract expires in 2042. As time goes on, if anything were to force me into a situation where I needed to sell it, the contract would be worth less and less as the time remaining on it would be shorter and shorter.

-Not to get too political, but we have an election coming up and our tax liability may change greatly depending on who is running the country.

On the bright side, this is the last you'll hear of me debating on whether DVC is a good thing or bad thing. When I crunched the numbers, I realized, there is no doubt, that when you compare apples to apples, DVC is a fantastic idea. Unfortunately, I simply don't have the cash up front to make the purchase, and for me, having to finance it and pay interest on that loan, and having to have that 5 year cloud hanging over my head, I simply would not feel comfortable. I guess I truly understand now why so many owners say buying really is a personal decision.

Bleep, bleep, bleep....That's all folks!