For anyone that has sold DVC

kamik86 · Oct 8, 2015

We are starting to toy around with the idea of selling our DVC. Not because of the latest annual pass increases but because we have not been in two years, have been going other places, and don't really have a strong desire to go back.

However I have some questions.
Does anyone know what the typical commission that a place like timeshare store or one of the other DVC resalers charge?

How do the taxes work (I'm in the US) on the sale? Do you pay them while your doing the sale or do you get a big hit on that years taxes later?

chalee94 · Oct 8, 2015

1) commissions are typically 8-12% of the sales amount
2) if you have a gain on the sale, it's a capital gain and you report it on your taxes at the end of the year.
if you have a loss on the sale, it's considered a personal loss and is not deductible for tax purposes.

LisaS · Oct 8, 2015

Agree with chalee94 -- commissions are usually 10% but at least one broker has a limited time offer of 8%. I'm not an accountant but I believe the way the taxes work is that you will owe taxes only if your sales proceeds (selling price minus the commission and $70 in fees) is more than what you originally paid (purchase price + closing costs + any fees you paid when you purchased). You would owe taxes on the amount that your proceeds exceeded what you paid, in other words on the profit on the sale. If you end up with less than what you originally paid, as chalee94 said, you cannot deduct the loss. If you sell during 2015 (the closing occurs on/before Dec 31, 2015) you would pay any taxes owed as part of your 2015 tax return (on or before April 15, 2016).

timdallas · Oct 10, 2015

What do you have? Place, points, banked, etc.?

DVC Doctor · Oct 10, 2015

It is a great time to be a seller....

CarolMN · Oct 10, 2015

timdallas said:
What do you have? Place, points, banked, etc.?

OP should not answer your question. The DIS does not allow "for Sale" posts or any posts with enough information in them to be construed as a "for sale" post. Posting the resort, points, etc. would qualify as too much information.

kapicka · Oct 10, 2015

I wonder, for tax purposes, if ongoing expenses factor in. If I buy a house at $100k and spend $100k fixing it up I only have to pay taxes on the amount of purchase over $200k, right?

So with annual costs on the timeshare purchase, can those be factored in when figuring profit at the end of the sale?

Dean · Oct 10, 2015

kapicka said:
I wonder, for tax purposes, if ongoing expenses factor in. If I buy a house at $100k and spend $100k fixing it up I only have to pay taxes on the amount of purchase over $200k, right?

So with annual costs on the timeshare purchase, can those be factored in when figuring profit at the end of the sale?

No, only up front costs and any sales related costs. You'll pay taxes on any gain after that but can't deduct if there are any losses.

CarolMN · Oct 11, 2015

kapicka said:
I wonder, for tax purposes, if ongoing expenses factor in. If I buy a house at $100k and spend $100k fixing it up I only have to pay taxes on the amount of purchase over $200k, right?

So with annual costs on the timeshare purchase, can those be factored in when figuring profit at the end of the sale?

The annual fees are more comparable to things like your home heating & cooling costs, lawn care, appliance replacements,
paint, etc. You don't get to deduct things like that from your taxes when you sell.

EvilDrPorkchop21 · Oct 11, 2015

CarolMN said:
OP should not answer your question. The DIS does not allow "for Sale" posts or any posts with enough information in them to be construed as a "for sale" post. Posting the resort, points, etc. would qualify as too much information.

Not to come off rude, but whats the difference between someone trying to utilize these forums to sell their contract, as opposed to those who are renting out points?

EvilDrPorkchop21 · Oct 11, 2015

For informational purposes I'm curious as to why you want to sell or what led to a lack of desire to come back (as long as its not rising ticket prices haha). As a recent DVC purchaser I'm always concerned that long term I might change my mind and want to sell etc....

What resort do you own? Did you feel like you didn't have enough points to vacation the way you wanted? etc

CarolMN · Oct 11, 2015

EvilDrPorkchop21 said:
Not to come off rude, but whats the difference between someone trying to utilize these forums to sell their contract, as opposed to those who are renting out points?

It's disboards.com policy. Please take a look at the Disboards.com Posting Guidelines:

www.wdwinfo.com/guidelines.htm

Questions regarding the board policies may be directed to corey@disneyinfo.com

DVCcurious · Oct 11, 2015

EvilDrPorkchop21 said:
Not to come off rude, but whats the difference between someone trying to utilize these forums to sell their contract, as opposed to those who are renting out points?

That's not the purpose of this website. There are lots of websites for those who wish to sell DVC points.

mort1331 · Oct 12, 2015

Wow that sucks for the taxes. On one had they will hit you for the increase and tax you on it as if it was an asset. Then on the other they wont let you right off the loss because it is not one. They get you both ways.

supersnoop · Oct 12, 2015

kapicka said:
I wonder, for tax purposes, if ongoing expenses factor in. If I buy a house at $100k and spend $100k fixing it up I only have to pay taxes on the amount of purchase over $200k, right?

So with annual costs on the timeshare purchase, can those be factored in when figuring profit at the end of the sale?

Dean said:
No, only up front costs and any sales related costs. You'll pay taxes on any gain after that but can't deduct if there are any losses.

CarolMN said:
The annual fees are more comparable to things like your home heating & cooling costs, lawn care, appliance replacements,
paint, etc. You don't get to deduct things like that from your taxes when you sell.

Generally speaking, any amount of the dues allocated to "Capital Reserves" and any special assessments can be used to adjust the cost basis. Those categories are equivalent to improvements, rather than just maintenance and repairs, in the house comparison.

Dean · Oct 12, 2015

supersnoop said:
Generally speaking, any amount of the dues allocated to "Capital Reserves" and any special assessments can be used to adjust the cost basis. Those categories are equivalent to improvements, rather than just maintenance and repairs, in the house comparison.

I know some hold that opinion including Dave McClintock, someone very knowledgeable from a CPA and timeshare standpoint.

Jfine · Oct 13, 2015

We're also planning on selling ours this year too. So if we're selling for $9 more a point, we'd pay taxes on $9 * number of points?

kamik86 · Oct 13, 2015

Just realized all the replies (didnt realize that posts here wouldn't give me an alert like when someone replies to me)

Thanks for the info on taxes I assumed I would be taxed on the full amount. I think we will be taking a slight loss from the original purchase price (we have AKL points) so won't be a huge tax burden. I'm not worried if there is a small loss, I got quite a few vacations out of owning.

As for not going back I always assumed when we bought that by now I would still be going to disney because I would have kids by now that I would want to bring. However since then my husband and I have learned that it is very likely we can't have children and if we can it will require more extreme measures. We aren't sure if we want to do that yet (I'm 29 now so we still have some time to decide) and have been taking other trips.

So its not really about the price of disney since we are still spending as much on vacations but if its just going to be us two adults instead of going to disney again and again we want to go other places. On top of that we could use this money for some other things we have been kicking around as options. We had been renting points for the last few years but honestly the amount we get over the price of dues would take years and years to make up for what we could get now resale and there is no real knowing what will happen 10-15 years from now to the resale market... but I know the prices are high enough for me to be ok with selling now.

We have some points rented at the moment so we can't sell until at least May so as to not disturb the trips we have booked for others, however I wanted to start running through the numbers of about how much money we think we can get. How much will get eaten by taxes and commision was important to that.

LisaS · Oct 13, 2015

kamik86 said:
Thanks for the info on taxes I assumed I would be taxed on the full amount. I think we will be taking a slight loss from the original purchase price (we have AKL points) so won't be a huge tax burden. I'm not worried if there is a small loss, I got quite a few vacations out of owning.

If you do end up with a gain, if you owned AKV for more than a year the profit on the sale is taxed as a long-term capital gain so the tax rate on any profit will be lower that what you pay on ordinary income.

On the other hand if you end up with a loss you should still report the sale on your tax return. You won't owe any taxes and cannot deduct the loss but it should prevent any issues with the IRS. The broker reports the proceeds from the sale to the IRS so you need to account for this on your tax return and show that the proceeds are less than what you paid. Otherwise the IRS could potentially come after you for taxes on the proceeds from the sale. I learned this from several articles I found on the web when I googled the name of the CPA Dean mentioned in his post. Very helpful information.

Disclaimer: I am not a CPA. This is not tax advice. I am just another DISboard member with a contract up for sale, going through the same learning curve as others on this thread.

chalee94 · Oct 13, 2015

Jfine said:
We're also planning on selling ours this year too. So if we're selling for $9 more a point, we'd pay taxes on $9 * number of points?

again, it's best to check with your personal accountant. if you tell the IRS that chalee94 from the internet said to do it "that way", things may end poorly.

with that disclaimer, I would agree with what lisa said above:

...you will owe taxes only if your sales proceeds (selling price minus the commission and $70 in fees) is more than what you originally paid (purchase price + closing costs + any fees you paid when you purchased). You would owe taxes on the amount that your proceeds exceeded what you paid, in other words on the profit on the sale.

if I purchased for $80 per pt for a 100 pt contract plus $400 in closing costs, then my total purchase price was $8400. if I sold now for $100 per pt, but paid 10% in closing costs, then I would have a net gain of $10,000 - $1000 in closing costs - $8400 = $600. I would expect to owe taxes on the $600 gain (again - as lisa said - at a long term capital gain rate that is lower than your typical personal tax rate).

dean and supersnoop are suggesting above that certain "capital improvements" included in our annual dues (i.e. not *all* of our annual dues would qualify) might also qualify to increase your basis and lower your overall taxable gain. that seems aggressive to me, but I have not looked into it - it's up to you and your CPA whether you think it's defensible.

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