What % do you pay in taxes when you rent your points out?

[Opie100]

So am I correct that, theoretically speaking, if I rent points out for $1200, and my DVC annual dues for those points were $900, then I would report $300 as income when filing?

 

[GoingSince1990]

So am I correct that, theoretically speaking, if I rent points out for $1200, and my DVC annual dues for those points were $900, then I would report $300 as income when filing?

Not quite; you should only deduct the tax and operating cost portion of the annual dues, not the capital reserve portion.

 

[AstroBlasters]

Just remember that aggressive accounting with vacation property is more likely to lead to an IRS audit…. is it worth it?

 

[GoingSince1990]

Just remember that aggressive accounting with vacation property is more likely to lead to an IRS audit…. is it worth it?

Deducting the expenses on rental income is no more “aggressive” than deducting a charitable contribution, or the interest on your mortgage. Just make sure to keep good records and any enquiry from the IRS can be dealt with quickly and easily. I’ve been renting out points since 2013 and taking appropriate deductions from the income without so much as a peep from the IRS.

 

[AstroBlasters]

Deducting the expenses on rental income is no more “aggressive” than deducting a charitable contribution, or the interest on your mortgage. Just make sure to keep good records and any enquiry from the IRS can be dealt with quickly and easily. I’ve been renting out points since 2013 and taking appropriate deductions from the income without so much as a peep from the IRS.

Deducting depreciation and expenses on a point based timeshare is not aggressive accounting?

We’ll have to agree to disagree on this one.

 

[Opie100]

Thx for responses. I'm no accountant but at least this seems to say the deduction is valid:

"1. Maintenance fees. The money you pay to maintain the property may be tax deductible, but only if you rent your timeshare. If you own the timeshare outright, however, you can’t deduct the maintenance fees. This is one of the rare cases where you have access to a deduction when renting that you won’t have access to if you own the property or if you have a secured loan on the property." https://wayfinancial.com/advanced-tax-planning/5-best-tax-deductions-for-timeshares

 

[GoingSince1990]

Thx for responses. I'm no accountant but at least this seems to say the deduction is valid:

"1. Maintenance fees. The money you pay to maintain the property may be tax deductible, but only if you rent your timeshare. If you own the timeshare outright, however, you can’t deduct the maintenance fees. This is one of the rare cases where you have access to a deduction when renting that you won’t have access to if you own the property or if you have a secured loan on the property." https://wayfinancial.com/advanced-tax-planning/5-best-tax-deductions-for-timeshares

Yep. Just as if you own a vacation cottage that you keep only for personal use, you don’t get to deduct expenses like cleaning, utilities, and routine repairs on your taxes. But if you rent it out, all of those expenses can be deducted from the rental income when filing your taxes.