Taxes?

[ClaraOswald]

Sorry if this is asked a lot but when I search "taxes" there are so many results!

We purchased a resale contract last year. Our first ever contract. Is there anything special we need to do at tax time? We have a local tax prep guy do everything for us. But I'm not sure if I should be expecting a form in the mail from Disney? Or if there's something I need to tell our tax guy?

We don't have a loan for our contract. Just paid for it outright.

 

[CarolynFH]

You may be able to deduct property taxes you’re paying on VGC, which are broken out on your dues statement. I can’t think of any other tax issues since you’re not paying mortgage interest on the purchase, but others will hopefully chime in here.

 

[drusba]

Near the end of every year, and you should already have it for 2023, you will get an Annual Dues Statement from DVD. If you have not received one in the mail, you can find the current one online: go to the DVC site and sign in, open "My DVC" and click on "My Annual Dues," and on page that comes up click on "Annual Dues Statement." That statement provides amount of dues for 2024 and also property taxes you actually paid in 2023. That statement is usable to claim a property tax deduction from income in your annual tax form if you can make such a claim, e.g., you have to be itemizing deductions on your tax form, which one would do only if one's allowable total itemized deductions exceed the standard deduction.

 

[ClaraOswald]

I just looked and it says our actual property tax paid for 2023 was $5.25. Estimated for next year is $169.07.

So....I'm thinking we probably don't need to give anything to our tax guy then, right?

 

[CarolynFH]

I just looked and it says our actual property tax paid for 2023 was $5.25. Estimated for next year is $169.07.

So....I'm thinking we probably don't need to give anything to our tax guy then, right?

You probably don't need to, since the only thing that would affect your 2023 taxes is the $5.25 you paid in 2023. But you might want to just let him know that next year, for your 2024 taxes, you'll have paid property taxes on a second home (admittedly, not a large amount, but some). That may or may not be significant depending on everything else that goes into determining your income tax liability.

 

[drusba]

I just looked and it says our actual property tax paid for 2023 was $5.25. Estimated for next year is $169.07.

So....I'm thinking we probably don't need to give anything to our tax guy then, right?

It just depends on whether you are itemizing deductions, your income for the year, and how you feel about taxes. For example, if you are in upper income levels and itemizing, by deducting another $5.25 from your income by claiming it, you could be lowering your federal taxes by about $1.50, and thus preventing the federal government from spending another $1.50 on useless programs.

 

[dcfromva]

You will want to keep your purchase price details in order to figure out your basis if you should sell your points in the future.

 

[MICKIMINI]

You will want to keep your purchase price details in order to figure out your basis if you should sell your points in the future.

And IF you ever rent DVC points, keep good records and make sure you tell your tax person!

 

[Mimi151]

And IF you ever rent DVC points, keep good records and make sure you tell your tax person!

Can you tell me more about this. I’m thinking of buying a DVC resale that has points banked that I won’t use. I know if I rent points out I’d have to report it as income on my federal taxes. I do not live in Florida and do state taxes in my home state. Would I need to file a Florida state taxes if I rent as well if renting DVC points?

 

[drusba]

Can you tell me more about this. I’m thinking of buying a DVC resale that has points banked that I won’t use. I know if I rent points out I’d have to report it as income on my federal taxes. I do not live in Florida and do state taxes in my home state. Would I need to file a Florida state taxes if I rent as well if renting DVC points?

As far income taxes go, the tax returns you need to file are federal and state of residence. For such taxes, if you want to deduct expenses for the rental, you need to file with the federal taxes a Schedule E. You can deduct from the rental income the proportion of annual operation/maintenance dues applicable to the points used for the reservation and property taxes (if not already deducted generally because you are using the standard deduction rather than itemizing). More controversial is deducting depreciation (a small portion of the value of the property you own). If you have not done this before and do not use a tax accountant, you need to review articles (many available on the internet) to see what and how you can deduct.

Nevertheless, you need to be aware of two rules, which many members who do rentals seem to ignore. One is that the DVC Membership Agreement actually prohibits you from using banked points to do rentals, see, e.g., BWV Membership Agreement §4.4. Also, all rentals are subject to Florida rental tax provisions: (a) there is a 6% state sales tax on the amount charged for the rental, and also a 6% Orange County transient occupancy tax for the WDW resorts. You can charge those taxes to the person to whom you rent, and if you do not charge it, you are supposed to pay it, and either way you need to file a required form with the payment, Form DR-15 in Florida to be filed with the Florida Department of Revenue.

 

[Mimi151]

Thanks for that info. Good to know about the banked points and it sounds like with renting I would have to do Florida state taxes the year I rented… so not interested in that. Haha. Guess I’ll have to use all points for me! . Since you seem very knowledgeable on the subject, if 10 years from now I sell it, do I have to do Florida state taxes that year? (Not a Florida resident).

 

[drusba]

Thanks for that info. Good to know about the banked points and it sounds like with renting I would have to do Florida state taxes the year I rented… so not interested in that. Haha. Guess I’ll have to use all points for me! . Since you seem very knowledgeable on the subject, if 10 years from now I sell it, do I have to do Florida state taxes that year? (Not a Florida resident).

Again, those Florida state taxes are not income taxes but sales taxes and transient taxes applicable to the any rental (a tax on renting hotel rooms, timeshares, etc.,e.g., every rental of a hotel room by Disney at WDW has those taxes payable as part of the rental). And one needs to be filed near the time of the rental.

When you sell, you may have to pay federal and state (your home state) income taxes on any capital gains income. You may also have transactional-related fees (part of closing costs on the sale) to be paid in Florida, e.g., filing fees with the local state agency to change records of ownership (and who pays what is determined by the sales contract).

 

[Ralph&Pam]

Thanks for that info. Good to know about the banked points and it sounds like with renting I would have to do Florida state taxes the year I rented… so not interested in that. Haha. Guess I’ll have to use all points for me! . Since you seem very knowledgeable on the subject, if 10 years from now I sell it, do I have to do Florida state taxes that year? (Not a Florida resident).

Florida does not have state income tax (plenty of other taxes, of course).

 

[sndral]

Near the end of every year, and you should already have it for 2023, you will get an Annual Dues Statement from DVD. If you have not received one in the mail, you can find the current one online: go to the DVC site and sign in, open "My DVC" and click on "My Annual Dues," and on page that comes up click on "Annual Dues Statement." That statement provides amount of dues for 2024 and also property taxes you actually paid in 2023. That statement is usable to claim a property tax deduction from income in your annual tax form if you can make such a claim, e.g., you have to be itemizing deductions on your tax form, which one would do only if one's allowable total itemized deductions exceed the standard deduction, and DVC is your only second home.

I itemize & have never deducted my DVC property taxes but may look into doing so this year, my question is if you own 2 different DVC resorts would that be considered only 1 second home by the IRS or would it be 2 second homes & you’d be limited to deducting the property taxes on only one of your resorts?

 

[drusba]

I itemize & have never deducted my DVC property taxes but may look into doing so this year, my question is if you own 2 different DVC resorts would that be considered only 1 second home by the IRS or would it be 2 second homes & you’d be limited to deducting the property taxes on only one of your resorts?

There is no limit to the number of "homes" for which you can deduct property taxes. The potential limit to deductions only for primary residence and a second home applies to mortgage interest, not property taxes. See, e.g., www.bankrate.com/taxes/claim-mortgage-interest-on-third-home/#:~:text=Real%20estate%20taxes%20paid%20during,home%20are%20not%20tax%2Ddeductible.

 

[MICKIMINI]

Can you tell me more about this. I’m thinking of buying a DVC resale that has points banked that I won’t use. I know if I rent points out I’d have to report it as income on my federal taxes. I do not live in Florida and do state taxes in my home state. Would I need to file a Florida state taxes if I rent as well if renting DVC points?

I personally do not account for MF's when I do taxes. I just write in the full amount of the rental. In the past, I've had many contracts and often combined the points for rentals, so it just wasn't worth my effort. If I were to just have want gigantic contract or multiple contracts for the same resort it would make sense.

I would contact a tax accountant if you are unsure, as I am not one!

Good luck!

 

[ILoveMyDVC]

There is no limit to the number of "homes" for which you can deduct property taxes. The potential limit to deductions only for primary residence and a second home applies to mortgage interest, not property taxes. See, e.g., www.bankrate.com/taxes/claim-mortgage-interest-on-third-home/#:~:text=Real%20estate%20taxes%20paid%20during,home%20are%20not%20tax%2Ddeductible.

Woah, you can deduct the financing interest for DVC like a mortgage?

 

[drusba]

Woah, you can deduct the financing interest for DVC like a mortgage?

As long as it is a loan done via a mortgage secured by a real property timeshare ownership interest, which is what one has typically gotten when one has purchased through Disney a partial real property interest in a condominium and gotten a loan as part of the process. There can be other types of loans that are not typical mortgage loans and interest may not be deductible as a result, e.g., someone getting a personal loan based on existing credit and uses it to buy a timeshare, such as in a resale situation, which is not a mortgage loan secured by the timeshare ownership interest, in which the case interest would not be deductible.

 

[Rex1993]

As long as it is a loan done via a mortgage secured by a real property timeshare ownership interest, which is what one has typically gotten when one has purchased through Disney a partial real property interest in a condominium and gotten a loan as part of the process. There can be other types of loans that are not typical mortgage loans and interest may not be deductible as a result, e.g., someone getting a personal loan based on existing credit and uses it to buy a timeshare, such as in a resale situation, which is not a mortgage loan secured by the timeshare ownership interest, in which the case interest would not be deductible.

Also note that if you rent any points during the tax year, you will likely lose the ability to deduct the mortgage interest for that tax year.