A Better SSR interest rate

[Dasha]

Why not use a Disney credit card convenience check for the $50 fee and get SSR financed for 5.99% for the life of the "loan" instead? Seems like a better deal.

 

[tiggerguy2000]

I did that with another card on my 2nd home resort.First I bought with AMEX and then transfered to another card at 3.9 with no tranfer charge.
tiggerguy2000

 

[WebmasterDoc]

Originally posted by Dasha
Why not use a Disney credit card convenience check for the $50 fee and get SSR financed for 5.99% for the life of the "loan" instead? Seems like a better deal.

The deal sounds great, but in most cases, the DVC mortgage will allow you to deduct the interest paid on your taxes, while the credit card interest is not deductible. Check with your tax advisor to help decide which will benefit the most.

Enjoy!

 

[SlyHubby]

I believe that if you keep good records of the amount you have charged that was paid to DVC for the timeshare ownership, you probably can deduct the interest as mortgage interest. It is not the fact that you are paying interest to a mortgage company, but rather the purpose. He can get a loan from me for all the IRS cares, as long as the proceeds are going to pay for the timeshare, that is what is important.

If you keep good records showing that the charge was to DVC, and keep a record of the interest payments that are specifically for the amount charged by DVC, you should have no problem. If by some chance you are audited, simply show the original charge by DVC, and your records splitting out the amount of interest payments for the DVC portion on your charge card - they most likely won't hassle you any further.

Ask a CPA to be sure - but, I am fairly confident that you don't have to take a loan from DVC or other mortgage company as a pre-requisite for deductability of interest.

 

[WebmasterDoc]

Ask a CPA to be sure - but, I am fairly confident that you don't have to take a loan from DVC or other mortgage company as a pre-requisite for deductability of interest.

Certainly check with your tax advisor, but a mortgage is usually defined as a loan secured with real property. A credit card balance is an unsecured loan in most cases and, as such, is not deductible. (Auto loans are not deductible either regardless who holds the loan.) In some cases, mortgages (loans that are secured by real property) may still not be deductible.

 

[CarolA]

I did research this on my first purchase and decided that the financing I used did not qualify for the mortgage interest.

The deduction is specfically for interest that is secured by real estate and meets the IRS definition of a home (a timeshare does qualify as a home as does a houseboat or motorhome). I would talk long and hard with a professional advisor before I deducted anything that was not secured by the real estate. What about a home equity loan?

 

[Doctor P]

Yes, it must be a mortgage in order to be deductible. A mortgage requires an interest in real property (home equity lines of credit are written as mortgages, too--just a little different kind).

 

[Dasha]

Wow, you guys like to make it complicated!

Okay, then use a 0% interest convenience check (I get this offer every 6 months from various credit card companies) and pay no interest and worry about no deduction paperwork

OR

If the rate is roughly 4% different (DVC 9.75 vs 5.99 or less these days) then the savings could make the lask of a deduction meaningless.

BTW the 5.99% offer is for the LIFE of the convenience check amount, not for a few months. I am leaning towards this route on my BW resale if approved by Disney.

 

[SlyHubby]

What about a home equity loan?

Yes, a home equity loan is unquestionably deductible, and the interest rate is surely less than what DVC would be charging. However, if you don't already have a home equity line of credit in place, you have to apply, pay the application fee (in most cases), etc.